Domer Companys research and development department is presenting a proposal for new-product research. The new product will

Question:

Domer Company’s research and development department is presenting a proposal for new-product research. The new product will require research, development, and design investments of $500,000 (discounted cash flow). Sales will begin after two years and will generate an annual discounted net cash flow of $200,000 starting in year three.

Calculate the break-even time for the new product.

Discounted Cash Flows
What is Discounted Cash Flows? Discounted Cash Flows is a valuation technique used by investors and financial experts for the purpose of interpreting the performance of an underlying assets or investment. It uses a discount rate that is most...