You have recently been hired as a financial advisor for Aura Intelligence, Inc. The company is considering investing in a new affordable cell phone that has improved video quality, battery life, and durability relative to previous editions. Following discussions between the sales and marketing departments, the company has decided to price the new phone at $80. The company estimates that variable costs for producing each phone are $35. The sales department estimates that the company can sell 550,000 units in the first year of the projects life, and the number of units sold is expected to increase by 4% annually until the project is wrapped up at the end of the tenth year. Further assume that the selling price per phone will decrease by 2% per year given the release of newer versions. This 2% decrease is a reduction from the previous year (i.e., the effect will compound over time). Variable costs per phone are not expected to change.

Fixed costs for the project are expected to be $8 million per year. Moreover, the company will need to invest a total of $75 million in fixed assets that will be 100% depreciable on a straight-line basis over the next 10 years. At the end of year 10, the company anticipates that it will sell this equipment for $4 million before taxes. Assume that the company is in a 21% corporate tax bracket. The company will also require an additional investment of $10 million in net working capital, and 100% of this investment will be recovered at the end of year 10.

Assuming the firms minimum required return is 12%, what is the NPV of this project?