FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 (after expenses) per year for 10 years. The cash inflows begin at the end of year 7. At FastTrack, there is a difference of opinion as to the "best" decision rule to use. The four rules under consideration are NPV, IRR, Payback Period and Profitability Index (PI). Additional Info: The firm's president has set a maximum acceptable payback period of 8 years for projects and the cost of capital appropriate for this project is 10%. Using the end of year cash flows as shown in the table (see below), answer each of the following: Year Cash Flows -$200,000 $200,000 -$200,000 -$200,000 -$200,000 -$200,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 Please highlight your final answer to make it easier for the graders la 1b What is the NPV of the project if the firm's cost of capital is 10%? Should the project be accepted or rejected based on NPV and why? FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 (after expenses) per year for 10 years. The cash inflows begin at the end of year 7. At FastTrack, there is a difference of opinion as to the "best" decision rule to use. The four rules under consideration are NPV, IRR, Payback Period and Profitability Index (PI). Additional Info: The firm's president has set a maximum acceptable payback period of 8 years for projects and the cost of capital appropriate for this project is 10%. Using the end of year cash flows as shown in the table (see below), answer each of the following: Year Cash Flows -$200,000 $200,000 -$200,000 -$200,000 -$200,000 -$200,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 Please highlight your final answer to make it easier for the graders la 1b What is the NPV of the project if the firm's cost of capital is 10%? Should the project be accepted or rejected based on NPV and why