The Conch Republic spent $750.000 to develop a prototype for a new smartphone that has all the features of the existing one but adds new features such as wifi tethering. 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 $205 each in variable costs. Fixed costs for the operation are estimated to run $5.1 million per year. The estimated sales volume is 64,000, 106,000, 87,000, 78,000, 54,000 per year for the next five years, respectively. The unit price of the new smartphone will be $485. The necessary equipment can be purchased for $34.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.5 million.

Net working capital will be 20 percent 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 will thus first occur in Year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a required return of 12 percent.

Required:
Prepare a report that answers the following questions:
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?