You are offered a three year distribution contract for a technology product with a short market life. Your initial costs for the rights to sell the product are $2,500,000. Your first year net cash flow is estimated to be $3,400,000, after which it will decrease each year by 50% of the previous year’s net cash flow. You may assume that your interest rate for available investments is 9%.

Answer rating: 100% (QA)

To analyze the profitability of the distribution contract we can calculate the Net Present Value NPV ... View the full answer