You have recently joined i-Unit, as a financial analyst, who are a market leader of cheap 5G telephony products and is considering a new product that is expected to generate $20 million per year including $10 million in expenses over five years. The initial outlay required is $25 million. The tax rate is 30% and the company policy is to depreciate the equipment on a straight-line basis for the life of the asset. A nominal discount rate of 9.2% is appropriate for the risk level. Inflation is 5%.

Recalculate part (a) using real cash flows, a real discount rate and comment on your result.