4.- Dell is working on a new tablet computer that it thinks will revolutionize the tablet market. They only plan to produce the new tablet for 4 years, after which it will stop making the product due...

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Extracted text: 4.- Dell is working on a new tablet computer that it thinks will revolutionize the tablet market. They only plan to produce the new tablet for 4 years, after which it will stop making the product due to obsolescence. The engineers just finished their $12million study to show that the new tablet technology works. It will require the purchase of new equipment valued at $5 billion that they will depreciate to zero over 5 years. They believe that they can sell it in year 4 for $0.5 billion. It will also require the use of existing equipment that currently has a market value of $0.8 billion. It is already fully depreciated, and would be completely worthless at the end of 4 years ifused in this project. They will also need inventory to increase by $2 billion and accounts payable to increase by $1 billion, both immediately. They would both stay at these elevated levels throughout the life of the tablet project. Dell expects the following changes over the next four years: Year 1 $5.2 billion $1.6 billion $1.4 billion $1.0 billion Year 20 $7.3 billion $2.6 billion $1.8 billion $1.0 billion Year 4 $4.1 billion $1.6 billion $0.4 billion $0a Year 3 $6.1 billion $2.3 billion $1.7 billiona $1.0 billiona Revenues COGS Wages Interest expense Dell's discount rate is 12%, and their tax rate is 30%. Should they invest in this new tablet?