company is thinking about marketing a new product. Up-front costs to market and develop the product are
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Question:
company is thinking about marketing a new product. Up-front costs to market and develop the product are $10.06 Million. The product is expected to generate profits of $1.10 million per year for 29 years. The company will have to provide product support expected to cost $325748 per year in perpetuity. Furthermore, the company expects to invest $36591 per year for 10 years for renovations on the product. This investing would start at the end of year 6. Assume all profits and expenses occur at the end of the year. Calculate the NPV of this project if the interest rate is 6.36%.
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