Question: The BobIU Computer Graphics Co. has just produced a new multimedia graphics chip which will cost $6,000,000 this year to put into production. They anticipate
The BobIU Computer Graphics Co. has just produced a new multimedia graphics chip which will cost $6,000,000 this year to put into production. They anticipate net cash flows of $3 million next year, $2million, $1 million, $.5 million, $.25 million and then $0 over each of the following years. The two owners use a 15% discount rate for future cash flows. The total value of this investment to the firm is:
A) Loss of -$371,783
B) Loss of 6,000,000
C) Profit of $652,174
D) Loss of -$811,328
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