In class, we analyzed the introduction of the HomeNet device by Cisco. The initial
forecasts included marketing and support costs of $2.8 million per year during years 1‐4. Under that
assumption, we calculated that HomeNet’s NPV would be equal to $7.6 million at a 12% cost of
capital. Suppose the marketing and support costs may be as high as $3.8 million per year. What is
HomeNet’s NPV in this case?