Perot Corporation is developing a new CPU chip based on a new type of technology. Its new chip, the Patay2 chip, will take two years to develop. However, because other chip manufacturers will be able to copy the technology, it will have a market life of three years after it is introduced. Perot expects to be able to price the chip higher in the first year, and it anticipates a significant production cost reduction after the first year as well. The relevant information

PATAY2 CHIP PRODUCT ESTIMATES
Development cost	$			30,000,000
Pilot testing	$			5,000,000
Debug	$			3,000,000
Ramp-up cost	$			2,000,000
Advance marketing	$			5,000,000
Marketing and support cost	$			1,000,000	per year
Unit production cost year 1	$			655.00
Unit production cost year 2	$			545.00
Unit price year 1	$			820.00
Unit price year 2 and 3	$			650.00
Sales and production volume				250,000
Interest rate				12	%

Assume all cash flows occur at the end of each year. a. What is the net present value (at the discount rate of 12%) of this project?

\begin{tabular}{llllll} \hline Project Schedule & Year 1 & Year 2 & Year 3 & Year 4 & Year 5 \\ \hline Development & & & & \\ Pilot Testing & & & & \\ Debug & & & & \\ Ramp-up & & & & \\ Advance Marketing & & & & \\ Marketing and Support & & & & & \\ Projection and Sales & & & & & \\ \hline \end{tabular}