You are evaluating the HomeNet project under the following$$ assumptions: Sales of $50$ comma $000$ units in year $1$ increasing by $48$ comma $000$ units per year over the life of the$$ project, a year $1$ sales price of $ $260/$unit$,$ decreasing by $9\%$ annually and a year $1$ cost of $ $120/$unit decreasing by $19\%$ 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$$ selling, general, and administrative expenses are $ $2\mathrm{.}8$ million per year$($assuming there is no$$ 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: LOADING....

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?

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Part $1$

a$.$ Using the FCF projections$$ given, calculate the NPV of the HomeNet project assuming a cost of capital of $10\%,12\%$ and $14\%.$