You decide to also write an email to Andrew Suarez, who is known as the genius behind all the successful Systech products. He is only $28$ years old and was recently appointed R&D Manager with more than $50$ engineers under his command. You have not met him yet, but you have heard that he is not the most talkative person in the world, unless the conversation is about codes and mathematical models, that is$.$ Anyway, you decide to write him to ask what the R&D costs needed to design the swimming headphones would be$,$ including any equipment that may be required to complete all the technical requirements of this new product.

In less than five minutes you receive the following email: Email $2$:

For: $[$Your name herel

From: Andrew Suarez $($R&D Manager$)$

Subiect: Swimmer's headphones project. Hi$,$

Money already spent in the development of somewhat similar products, with technologies that could be useful for the swimming headphones: USD $1,500,000.$

I will need to hire between $8$ and $12$ full time engineers for research and development, for which we will pay an initial fee of USD $3,500,000$ that will be amortized in five years.

In the design stage, I will also need new equipment that the company does not have vet and that needs to be purchased if we decide to go through with the project. The equipment costs USD $13,500,000($it will last $5$ years with no resale value$).$ Although we will not manufacture the headphones, we still need the equipment for further R&D$.$

There is no need to worry about space, because our south city warehouse is empty now.

Martha wanted to rent it for USD $400,000$ per year, but I told her that we will need the space to work on this Swimmer's Headphone project. Regards,

Andrew.

After careful consideration of the two emails, you wonder whether the USD $1\mathrm{.}5$ million in R&D and the USD $400,000$ annual warehouse rent should be included in the project valuation mo del or not. Should I ask him again? you think. But you decide not to and go on gathering data.

Based on the above case study, How can the FM handle the research and development expenses? Are these figures part of the investment for this project? What about the warehouse rental expense? Should these figures be included in the financial analysis for the project?