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You are evaluating the HomeNet project under the following assumptions: Sales of 80,000 units in year 1 increasing by 60,000 units per year over the

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You are evaluating the HomeNet project under the following assumptions: Sales of 80,000 units in year 1 increasing by 60,000 units per year over the Me of the project, a year t sales price of $260 lunit, decreasing by 9% annually and a year 1 cost of $120 unit decreasing by 21% annually. In adoicon, new tax laws alow toos, bonus depreciation (all the depeociation axpense, 8120 milion, oocurn when the asset is put into use, in this ease imenediatey). Research and devolopment expenstures total 515 million in year 0 and seling, generat, and adminiszabve oxponses arn 52.8 million per year (assuming there is no cannibalization). Aso assume HomeNet wil tave no incremental cash or inventory requinements (products will be shisped dinotly from the cortract manufacturer to custorters). Howner, fnceivatias telated to HomeNiot ate expected to acooust for 15% of annual sales, and payabios are expected to be 15% of the enrual ocot of goods sold. Under these assumptions, the unlevered net income, net working caplal requirements asd tree cash flow are shown in the tabio: a. Using the FCF projections given, calovate the NPV of the HomeNet project assuming a cost of captal of 10%,12% and 14% b. What is the IRR of the project in thits case? a. Ueing the FCF projections given, calculate the NPV of the Homolvet peoject astuming a cont of capital of 10%,12% and 14%. The NPV of the FCF's of the HomeNet project assuning a cost of copital of 10% is ? (Round to the nearest moutand dolars.)

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