you are ceo of rivet networks, maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. the product, the killer x3000, will cost $900,000 to develop upfront (year 0), and you expect revenues the first year of $800,000, growing to $1.5 million the second year, and then declining by 40% per year for the next 3 years before the product is fully obsolete. in years 1 through 5, you will have fixed costs associated with the product of $100,000 per year, and variable costs equal to 50% of revenues.
