Case   Over the last two years, HP has already spent $120 million…

EarlPowerStingray18 Case   Over the last two years, HP has already spent $120 million…Case Over the last two years, HP has already spent $120 million on R&D to optimise the design of the new smartphone. HP’s management is uncertain whether to charge this R&D cost to the new project. If the company would decide to go ahead with the project, the development and production of the new phone will initially require an investment equal to 40% of the company’s current net property, plant and equipment (PPE), as per the fiscal year ended 31 October 2022. The project will then require an additional investment in PPE equal to 35% of the initial investment after the first year of the project. The new smartphone is expected to have a life of five years. Assume that the company will fully depreciate these assets by the straight-line method over a seven-year life. The expectation is that the property, plant and equipment can be sold at the end of the project with a liquidation value of about 10% of its acquisition values. The company will borrow $100 million to (partly) finance this project, at an interest rate of 6% per annum.First-year revenue for the new product is expected to be 3.6% of total revenue for HP’s fiscal year ended 31 October 2022. The phone’s revenue is expected to grow at 75% for the second year, then 20% for the third, and after that decline by 5% annually for the final two years of the expected life of the product. Your team will have to determine the rest of the cash flows associated with this project. The CFO of the company has indicated that the operating costs of this project will be of similar proportion relative to the revenues as the company’s existing products. The new project would require an additional NWC of about 25% of the first- year revenues of the project. Here are some additional tips to guide your analyses: ReportThe company is asking your team for financial advice. The results of your analyses will have to be presented as a business report to the HP executive management team. The executive management team will expect much more from the report, than just a table(s) with the NPV and IRR results.  Questions1. The report should provide clear advice on whether the company should go ahead with the project.2. A summary of recent insights in the smartphone market from reputable and credible business finance articles (including references).3. A discussion on potential risks involved with this project. Image transcription textAH ? C … Corporate-Finance-ASM-2 Q Home Insert Page LayoutFormulas Data Review View LE Share Arial 12 AA ab Wrap Text vGeneral _ Auto-sum v Fill v % 9 Conditional Format Ce… Show more… Show moreImage transcription textWHY . C … Corporate-Finance-ASM-2 Q Home Insert Page LayoutFormulas Data Review View LE Share General _ Auto-sum v Arial12 AA ap Wrap Text v Fill v % ” Conditional For… Show more… Show moreImage transcription textWHY . C … Corporate-Finance-ASM-2 Q Home Insert Page LayoutFormulas Data Review View LE Share Arial AA ap Wrap Text vGeneral _ Auto-sum v Fill Paste BI UV Merge & C… Show more… Show moreImage transcription textA H Y . C … Corporate-Finance-ASM-2 Q Home Insert PageLayout Formulas Data Review View LE Share Calibri (Body) 11 AAD Wrap Text Accounting _ Auto-sum v Fill Paste BI UV … Show more… Show moreI was not able to upload the excel file but this is all that is in the File. Thank you for you understanding .BusinessBusiness – Other