You are considering making a movie. The movie is expected to cost $10.6 million up front and take a year to produce. After that, it is expected to make $4.3 million in the year it is released and $1.7 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 10.9%
a. What is the payback period of this investment ?
The payback period is ____ years
b. Yes/No
c. Does the movie have positive NPV if the cost of capital is 10.9%?
d. Therefore, the NVP is ___________.