Joey Chestnut, the hot dog competitive eating champion, sees all of these ads for home workout machines. He is disappointed because his gyms - restaurants - aren't open so he cannot work out. Thus, he decides to create home workout machine for competitive eating contestants. The machine would automatically dispense hot dogs with all the fixings as fast as someone could eat them. Like Peloton, you can compete against other contestants at the same time. He'll call the new machine "Eat-a-Ton." To start the machine, Joey will need to spend $250,000 today creating the machine. He'll then make $100,000 per year for the next 4 years starting a year from today before everyone who uses the machine dies from heart disease. After settling lawsuits, he'll need to payout $25,000 exactly 5 years from today. These payments will grow by 2% per year forever. If his discount rate is 12%, what is the NPV and should Joey start the project?

Answer rating: 100% (QA)

To calculate the Net Present Value NPV of Joey Chestnuts EataTon project we need to discount all the ... View the full answer