Entrepreneurial Inc. is evaluating a new product launch that will cost it $32667 to launch. The company projects it will generate $733228 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 12%.

If after the first year, the product is doing worse than expected, then the company projects annual cash flows will only be $423948 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?

Answer rating: 100% (QA)

If the product performs worse than expected after the first year leading to annual cash flows of 423... View the full answer