You are evaluating the HomeNet project under the following assumptions: Sales of 50,000 units in year 1 increasing by 46,000 units per year over the life of the project, a year 1 sales price of $260/ unit, decreasing by 9% annually and a year 1 cost of $120/ unit decreasing by 18% annually. In addition, new tax laws allow 100% bonus depreciation (all the depreciation expense, $120 million, occurs when the asset is put into use, in this case immediately). Research and development expenditures total $15 million in year 0 and selling, general, and administrative expenses are $2.8 million per year (assuming there is no cannibalization). Also assume HomeNet will have no incremental cash or inventory requirements (products will be shipped directly from the contract manufacturer to customers). However, receivables related to HomeNet are expected to account for 15% of annual sales, and payables are expected to be 15% of the annual cost of goods sold. Under these assumptions, the unlevered net income, net working capital requirements and free cash flow are shown in the table: a. Using the FCF projections given, calculate the NPV of the HomeNet project assuming a cost of capital of 10%,12% and 14% b. What is the IRR of the project in this case? a. Using the FCF projections given, calculate the NPV of the HomeNet project assuming a cost of capital of 10%,12% and 14%. The NPV of the FCF's of the HomeNet project assuming a cost of capital of 10% is $ (Round to the nearest thousand dollars.) \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline & Year & 0 & 1 & 2 & 3 & 4 & 5 \\ \hline \multicolumn{8}{|l|}{ HomeNet } \\ \hline Units Sales (000s) & 46 & & 50 & 96 & 142 & 188 & - \\ \hline Sales Price (\$/unit) & 9% & & 260 & 236.60 & 215.31 & 195.93 & \\ \hline Cost of Goods Sold (\$/unit) & 18% & & 120 & 98.40 & 80.69 & 66.17 & - \\ \hline Operating Expenses ( $000 s) & & & & & & & - \\ \hline Hardware \& Software Develop. & & (15,000) & & & & & - \\ \hline Marketing \& Technical Support & & & (2,800) & (2,800) & (2,800) & (2,800) & - \\ \hline Capital Expenditures & & & & & & & - \\ \hline Lab Equipment & & (7,500) & & & & & - \\ \hline Depreciation & & 100% & - & - & - & - & - \\ \hline Corporate Tax Rate & & 20% & 20% & 20% & 20% & 20% & - \\ \hline \end{tabular}