People like to ask AI questions and get answers you want to start your own AI bot. However, rather than have a straight-faced chat, you decide to start one for parents to prepare for talking to their teenagers. It will talk back, be super demanding, give half answers, not respond half the time, and randomly answer with "EVERYONE ELSE IS DOING IT" or "Can I have some money?". You'll call the bot "Brat Group of Pretentious Teenagers" or "BratGPT." To start BratGPT, you will need to invest $2 million per year for 5 years starting TODAY. You then believe you'll make $3 million per year for 8 years starting 4 years from today. However, you'll then have to pay out $2 million per year for 5 years starting 15 years from today to compensate users for the therapy because it worked TOO well. If your discount rate is 10%, what is the NPV and should you start BratGPT?

Answer rating: 100% (QA)

SOLUTION To calculate the net present value NPV of BratGPT we need to discount the cash flows to the... View the full answer