Conch Republic spent $1.2 million to develop a prototype for a new smartphone. The company has spent a further $250,000 for a marketing study. Conch Republic can manufacture the new smartphone for $210 each in variable costs. Fixed costs for the operation are estimated to run $5.3 million per year. The estimated sales volumes are 64,000, 106,000, 87,000, 78,000, and 54,000 per year for each of the next 5 years, respectively. The unit price of the new smartphone will be $515. The equipment can be purchased for $38.5 million and will be depreciated on a 7 year MACRS schedule. It is believed the value of the equipment in 5 years will be $5.8 million. Net working capital for the smartphones will be 20% of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC thus will occur first in Year 1 with the first year's sales. There is a 22% corporate tax rate and a required return of 12%. Prepare a report that answers the following questions:

Please use Excel Spreadsheet Setup:

		Year 1	Year 2	Year 3	Year 4	Year 5
	Depreciation rate
			Year 1	Year 2	Year 3	Year 4	Year 5
	Variable Costs
	Fixed costs		5,300,000	5,300,000	5,300,000	5,300,000	5,300,000
	Depreciation		5,501,650	9,428,650	6,733,650	4,808,650	3,438,050
	EBT
	Tax		1,918,037	3,872,297	3,190,297	3,009,897	1,701,029
	NI (net income)
	Depreciation
	OCF (operating cash flow)		$12,301,963	$23,157,703	$18,044,703	$15,480,103	$9,468,071
	Beginning Balance of NWC
	Changes in Net Working Capital
	Net Working Capital Cash Flow
	Net CF