Excel Spreadsheet Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company...

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Conch Republic Electronics is a midsized electronicsmanufacturer located in Key West, Florida. The company president isShelley Couts, who inherited the company. Over the years, thecompany expanded into manufacturing and is now a reputablemanufacturer of various electronic items. One of the majorrevenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smart phone model on themarket, and sales have been excellent. Conch republic spent$750,000 to develop a prototype for a new smart phone that has allthe features of their existing smart phones. The company has spenta further $200,000 for a marketing study to determine the expectedsales figures for the new smart phone.
Conch republic can manufacture the new smart phones for $220each in variable costs. Fixed costs for the operation are estimatedto run $6.4 million per year. The estimated sales volume is155,000, 165,000, 125,000, 95,000, and 75,000 per year for the nextfive years, respectively. The unit price of the new smart phonewill be $535. The necessary equipment can be purchased for $43.5million and will be depreciated on a seven-year MACRS schedule. Itis believed the value of the equipment in five years will be $6.5million.
As previously stated, Conch Republic currently manufactures asmartphone, production of the existing model is expected to beterminated in two years. If Conch Republic does not introduce thenew smartphone, sales will be 95,000 units and 65,000 units for thenext two years respectively. The price of the existing smart phoneis $385 per unit; with variable cost of $145 and fixed costs of$4.3 million per year. If Conch Republic does introduce the newsmartphone, sales of the existing smart phone will fall by 30,000per unit, and the price of the existing units will have to belowered to $215 each. Net working capital for the smart phones willbe 20 percent of sales and will occur with the timing of the cashflows for the year (i.e., there is no initial outlay for NWC).Changes in NWC will thus first occur in Year 1 with the firstyear's sales. Conch republic has a 21 percent corporate tax rateand a required rate of 12 percent.
What is the payback period of the project?
What is the profitability index of the project?
What is the IRR of the project?
What is the NPV of the project?

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CONCH REPUBLIC ELECTRONICS 0 1 2 3 4 5 Sales in units of new smart phone 155000 165000 125000 95000 75000 Sales revenue 535 82925000 88275000 66875000 50825000 40125000 Variable cost 220 34100000 36300000 27500000 20900000 16500000 Fixed costs other than depreciation 6400000 6400000 6400000 6400000 6400000 Depreciation 7 Year MACRS 1429 2449 1749 1249 893 Depreciation expense 6216150 See Answer

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***Excel Spreadsheet***Conch Republic Electronics is a midsized electronicsmanufacturer located in Key West, Florida. The company president isShelley Couts, who inherited the company. Over the years, thecompany expanded into manufacturing and is now a reputablemanufacturer of various electronic items. One of the majorrevenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smart phone model on themarket, and sales have been excellent. Conch republic spent$750,000 to develop a prototype for a new smart phone that has allthe features of their existing smart phones. The company has spenta further $200,000 for a marketing study to determine the expectedsales figures for the new smart phone.Conch republic can manufacture the new smart phones for $220each in variable costs. Fixed costs for the operation are estimatedto run $6.4 million per year. The estimated sales volume is155,000, 165,000, 125,000, 95,000, and 75,000 per year for the nextfive years, respectively. The unit price of the new smart phonewill be $535. The necessary equipment can be purchased for $43.5million and will be depreciated on a seven-year MACRS schedule. Itis believed the value of the equipment in five years will be $6.5million.As previously stated, Conch Republic currently manufactures asmartphone, production of the existing model is expected to beterminated in two years. If Conch Republic does not introduce thenew smartphone, sales will be 95,000 units and 65,000 units for thenext two years respectively. The price of the existing smart phoneis $385 per unit; with variable cost of $145 and fixed costs of$4.3 million per year. If Conch Republic does introduce the newsmartphone, sales of the existing smart phone will fall by 30,000per unit, and the price of the existing units will have to belowered to $215 each. Net working capital for the smart phones willbe 20 percent of sales and will occur with the timing of the cashflows for the year (i.e., there is no initial outlay for NWC).Changes in NWC will thus first occur in Year 1 with the firstyear's sales. Conch republic has a 21 percent corporate tax rateand a required rate of 12 percent.What is the payback period of the project?What is the profitability index of the project?What is the IRR of the project?What is the NPV of the project?

***Excel Spreadsheet*** Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company...