You work for Apple. After toiling away on $10 million worth of prototypes , you have finally produced your answer to Google Glasses: iGlasses. iGlasses will instantly transport th e wearer into the world as Apple wants you to experience it: iTunes with the wink of an eye and apps that can be activated just by looking at them. You think that these will sell for 5 years until the next big thing comes along. Revenues are projected to b e $450 million per year along with expenses of $350 million. You will need to spend $60 million immediately on additional equipment that will be depreciated using the 5 - year MACRS schedule. Additionally, you will use some fully depreciated existing equipme nt that has a market value of $10 million. ( If it weren’t for the iGlasses project, Apple would have sold the equipment. ) As iGlasses are an outcome of the R&D center, Apple plans to charge $5 million of the annual costs of the center to the iGlasses produ ct for 5 years. (Notice that operating expenses have already been capture d by the $350 million. You can think of this additional cost as an overhead expense .) Finally Apple’s working capital levels will increase from their current level of $120 million to $140 million immediately. They will remain at the elevated level until year 5, when they will return to $120 million. Apple’s discount rate for this project is 15% and its tax rate is 35%. Calculate the free cash flows and determine the NPV of this project.