Neptune Biometrics, despite its promising technology, is having difficulty generating profits. Having raised $85 million in an

Question:

Neptune Biometrics, despite its promising technology, is having difficulty generating profits. Having raised $85 million in an initial public offering of its stock early in the year, the company is poised to intro-duce a new product, an inexpensive fingerprint door lock. If Neptune engages in a promotional campaign costing $55 million this year, its annual after-tax cash flow over the next five years will be only $1 mil-lion. If it does not undertake the campaign, it expects its after-tax cash flow to be – $15 million annually for the same period. Assuming the company has decided to stay in its chosen business, is this campaign worthwhile when the is 8 percent? Why or why not? Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...