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You are evaluating the HomeNet project under the following assumptions: Sales of 50,000 units in year 1 ncreasing by 50.000 units per year over the

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You are evaluating the HomeNet project under the following assumptions: Sales of 50,000 units in year 1 ncreasing by 50.000 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 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). Under these assumptions the unlevered net income is shown in the table: Suppose that 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. a. Calculate HomeNet's net working capital requirements (that is, reproduce Table 8.4 under the assumntions niven) a. Calculate HomeNet's net working capital requirements (that is, reproduce Table 8.4 under the assumptions given). The net working capital for year 1 is $ (Round to the nearest thousand dollars.) (Click on the following icon 5 in order to copy its contents into a spreadsheet.) (Click on the following icon in order to copy its contents into a spreadsheet.) QU (Click on the following icon D in order to copy its contents into a spreadsheet) HomeNet's Net Working Capital Requirements \begin{tabular}{rlrrrrr} & Year & 0 & 1 & 2 & 3 & 4 \\ \hline Net Working Capital Forecast (S000s) & & & & \\ 1 & Cash Requirements & & & \\ 2 & Inventory & & & \\ 3 & Recelvables (15\% of sales) & & 3,525 & 3,525 & 3,525 & 3,525 \\ 4 & Payable (15\% of COGS) & & (1,425) & (1,425)(1,425)(1,425) \\ 5 & Net Working Capital & & 2,100 & 2,100 & 2,100 & 2,100 \\ \hline \end{tabular}

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