Question

You are considering making a movie. The movie is expected to cost $10.5 million up front...

You are considering making a movie. The movie is expected to cost $10.5 million up front and take a year to produce. After​ that, it is expected to make $4.6 million in the year it is released and $1.6 million for the following four years. What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? Does the movie have positive NPV if the cost of capital is 10.1%​?

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Answer #1

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

pv factor at 10.1% = 1/(1+r)^n

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