Conch Republic Electronics ,Spent $750,000 to develop a prototype (or Model) for a new PDA ,Spent an additional $200,000 for marketing study to determine the expected sales. ,Can manufacture the new PDA with variable cost for $215.00 each. ,Fixed Costs for the operation are estimated at $4.3 million per year. ,Unit Price $500.00 each ,Necessary equipment to produce the PDA will cost $32.5 million, with depreciation for 7 years MACRS schedule. ,It is believed that this equipment after 5 years will be worth $3.5 million. ,NWC will be 20% of Sales ,Changes in NWC will occur in Year 1, with the first year sales. ,There is no initial outlay for NWC. ,Conch Republic Corporate Tax Rate is 35% and has a 12% required return. ,Estimated Sales Volumes: ,NWC 20% ,Year Est.Sales of Sales ,1 65,000 14,000 ,2 82,000 16,000 ,3 108,000 20,000 ,4 94,000 17,000 ,5 57,000 15,000 ,,Prepare pro forma financial statement and Project cash flows. ,Calculate NPV, IRR, Payback period, PI
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