Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the companys finance department.

One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market, and sales have been excellent. the smartphone is a unique item in that it comes in a variety of tropical colors and is shipped with advanced camera features.

However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing smartphone but adds new features such as wireless charging. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone.

Conch Republic can manufacture the new smartphone for $155 each in variable costs. Fixed costs for the operation are estimated to run $4.7 million per year. The estimated sales volume is 74000, 95000, 125,000, 105,000 and 80,000 per each year for the next five years, respectively. The unit price of the new smartphone will be $360. The necessary equipment can be purchased for $21.5 million and will be depreciated to zero book value by straight line method in eight years. It is believed the equipment can be sold at $4.1 million after five years.

As previously stated, Conch Republic currently manufactures a smartphone. Production of the existing model is expected to be terminated in two years. The price of existing smartphone is $290 per unit, with variable costs of $120 each and fixed costs of $1.8 million per year. If Conch Republic does not introduce the new smartphone, sales will be 80,000 units and 60,000 units for the next two years, respectively. If Conch Republic does introduce the new smartphone, sales of the existing smartphone will fall by 15,000 units per year, and the price of the existing units will have to be lowered to $255 each. Net working capital for the smartphones will be 20 percent of total sales and will occur with the timing of the cash flows for the years; for example, there is no initial outlay for NWC, but changes in NWC will first occur in year 1 with the first years sales. Conch Republic has a 35 percent corporate tax rate and a 12 percent required return.

Questions: *****Please show how to solve on a financial calculator, Thanks!*****

a)What is the payback period of the project?

b) What is the profitability index of the project?

c). What is the IRR of the project?

d). What is the NPV of the project