Company XYZ has spent $250,000 to develop a new product - smart beehive. The company has spent $24,000 for a market research for figuring out the expected demand for the beehives.

Company XYZ can manufacture the beehives for $2200 each in variable costs. Fixed costs are estimated to be $1.2 million per year. The estimated sales volume is 2000, 2400, 2800, 3400, and 3400 units per year for the next five years, respectively. The unit price of the beehive will be $3900. The necessary equipment for producing the beehives can be purchased for $8.2 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $1.4 million.

The need for the net working capital for producing the beehives will be 20 percent of next years sales. Company XYZ has a 35 percent corporate tax rate and a 12 percent required return.

1. What is the payback period of the project?

2. What is the profitability index of the project?

3. What is the IRR of the project?

4. What is the NPV of the project?