Question: Superfast Bikes is thinking of developing a new composite road bike. Development will take6 6years and the cost is$ $208,500 208,500per year. Once in production,

Superfast Bikes is thinking of developing a new composite road bike. Development will take6

6years and the cost is$

$208,500

208,500per year. Once in production, the bike is expected to make$

$296,102

296,102per year for10

10years. The cash inflows begin at the end of year7

7.Assuming the cost of capital is9.5

9.5% per annum:

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