Perot Corporation is developing a new CPU chip based on a new type of technology. Its new chip, the Patay$2$ 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 two 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. The relevant information for developing and selling the Patay$2$ is given as follows:

Assume all cash flows occur at the end of each period.

a$.$ What are the yearly cash flows and their present value $($discounted at $10$ percent$)$ of this project? What is the net present value?

Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate

calculations. Negative value should be indicated by a minus sign.

Net present value

b$.$ Perot's engineers have determined that spending $$10$ million more on development will allow them to add even more advanced

features. Having a more advanced chip will allow them to price the chip $$50$ higher in both years for year $1$ and $$700$ for year

$.$ What is the NPV of the project if this option is implemented?

Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate

calculations. Negative value should be indicated by a minus sign.

Net present value

c$.$ If sales are only $224,000$ the first year and $112,000$ the second year, what would the NPV of the project be$?$ Assume the

development costs and sales price are as originally estimated.

Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate

calculations. Negative value should be indicated by a minus sign.

Perot Corporation is developing a new CPU chip based on a new type of technology. Its new chip, the Patay$2$ 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 two 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. The relevant information for developing and selling the Patay$2$ is given as follows: