You are planning to produce a new action figure called Nia. However, you are very uncertain...
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You are planning to produce a new action figure called "Nia". However, you are very uncertain about the demand for the product. If it is a hit, you will have net cash flows of $52 million per year for three years (starting next year [l.e., at t=1]). If it fails, you will only have net cash flows of $12 million per year for two years (also starting next year). There is an equal chance that it will be a hit or failure (probability = 50 percent). You will not know whether it is a hit or a fallure until after the first year's cash flows are in (i.e., at t=1). You must spend $85 million immediately for equipment and the rights to produce the figure. If the discount rate is 10 percent, calculate Nia's NPV. Multiple Choice $5.93 O -$9.93 -$15.20 $14.77 You are planning to produce a new action figure called "Nia". However, you are very uncertain about the demand for the product. If it is a hit, you will have net cash flows of $52 million per year for three years (starting next year [l.e., at t=1]). If it fails, you will only have net cash flows of $12 million per year for two years (also starting next year). There is an equal chance that it will be a hit or failure (probability = 50 percent). You will not know whether it is a hit or a fallure until after the first year's cash flows are in (i.e., at t=1). You must spend $85 million immediately for equipment and the rights to produce the figure. If the discount rate is 10 percent, calculate Nia's NPV. Multiple Choice $5.93 O -$9.93 -$15.20 $14.77
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