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

You are evaluating the HomeNet project under the following assumptions: Sales of units in year 1 increasing by units per year over the life of the project, a year 1 sales price of /unit, decreasing by annually and a year 1 cost of /unit decreasing by 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 million in year 0 and selling, general, and administrative expenses are million per year (assuming there is no cannibalization). Under these assumptions the unlevered net income is shown in the table: LOADING.... 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 of annual sales, and payables are expected to be of the annual cost of goods sold. a. Calculate HomeNet's net working capital requirements (that is, reproduce Table 8.4 LOADING... under the assumptions given). b. Calculate HomeNet's FCF (that is, reproduce Table 8.3 LOADING... under the same assumptions).

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