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View Full Version : You are considering making a movie. The movie is expected to cost $10 million upfront


mcclainave96
Feb 15, 2011, 02:39 PM
You are considering making a movie. The movie is expected to cost $10 million upfront and take a year to make. After that, it is expected to make $5 million in the year it is released and $2 million for the following four years. What is the payback period of this investment? If you require a payback period of two years years, will you make the movie? Does the movie have a positive NPV if the cost of capital is 10%? Show detailed calculations when answering the problem.

Curlyben
Feb 15, 2011, 02:56 PM
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