Entrepreneurial Inc. is evaluating a new product launch that will cost it $26982 to launch. The company projects it will generate $693529 in annual operating cash flow at the end of each of the next 3 years, after which it will discontinue the product. The appropriate discount rate for the product is 16%.
If after the first year, the product is doing worse than expected, then the company projects annual cash flows will only be $395593 for the remaining two years of the project. What would be the value of the product line at that time (i.e. one year from now) in such a case?