You are considering making a movie. The movie is expected to cost $10.5 million up front...
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You are considering making a movie. The movie is expected to cost $10.5 million up front and take a year to produce. After that, it is expected to make $4.4 million in the year it is released and $1.9 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.3%? You are considering making a movie. The movie is expected to cost $10.5 million up front and take a year to produce. After that, it is expected to make $4.4 million in the year it is released and $1.9 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.3%?
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To calculate the payback period we need to determine how long it takes for the movies cumulative cas... View the full answer
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