You are considering making a movie. The movie is expected to cost $10.6 million upfront and take a year to make. After that, it is expected to make $4.7 million in the first year it is released (end of year 2) and $2.1million for the following four years (end of years 3 through 6) .
What is the payback period of this investment? If you require a payback period of two years, will you make the movie?
What is the NPV of the movie if the cost of capital is 10.1%. According to the NPV rule, should you make this movie?
What is the payback period of this investment? The payback period is years. The NPV is $ million. According to the NPV rule, should you make this movie?
According to the NPV rule you should ___ not make the movie?