You are given the following information on the expected outcomes for a two-phase project that starts with a 2-year R&D phase and is followed with a 5-year production phase. The cash outlay for the R&D study is $15.5M. And the company will spend another $62.5M to put the production facility in place at the end of the R&D phase. If the R&D study is successful, which is expected to have a probability of 0.67, the expected cash flows will be $5.5M for the first quarter of production and will grow at a quarterly rate of 1.5% throughout the production phase If the study fails, the expected quarterly cash flows will remain at $4.8M throughout the production phase. The annual discount rate is 14.4%, compounded monthly.

(a) Compute the NPV of the 2-phase project (at t=0) assuming that the project will be implemented regardless of the outcome of the R&D study.