Question: While working for company A + you were tasked with determining if a specific product development project was going to be feasible or not. For

While working for company A+ you were tasked with determining if a specific product development project was going to be feasible or not. For this task you decided to use the NPV method.
After talking with the Project Manager and some of the Technical Leads for this potential project you were able to gather the following:
Product Development period: 2 years, with a yearly cost of $-139
Product Testing period: 1 year, with a yearly cost of $-31
(Where Testing can only start after Development is complete)
After calling a few marketing companies, you were able to estimate a yearly expense of $-2 for marketing during the 3 years your company will sell this product. During the same 3 years that your company will spend selling this product, you estimated a total yearly expense of $-2,436 to keep producing the product.
Lastly, the sales department estimated a total yearly revenue of $3,042 from selling the product.
(Where sales can only start after Testing has been completed)
Company A+ is looking for a yearly return of 0.08 for investing in this product. (Discount rate of 0.08).
What is the NPV for this product development? (No Decimal Places)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!