Caitlin Elizabeth was recently tasked with evaluating projects for Blue Sky Airlines. The company recently decided to use NPV as its primary criterion for approving projects. To be selected, a project must have a positive NPV.

Caitlin is currently evaluating a project with the following estimated investment requirements ($ millions) by year (starting in year 0):

The estimated revenues ($ millions) from the project, expected to begin at time 5, are given in the table below:

To account for the different risk characteristics throughout the project's life, Caitlin has determined that a hurdle rate of 38% should be used beginning at time 0, while 31% should be used beginning in period 4.

Determine the NPV for the project.

NPV:

13 Investment Year Investment 0 16.8 1 2 17 3 14.5 4 11.9 5 10.4 CONO Revenue Year Revenue 0 16.2 1 8.7 9.9 15.5 CON