Neptune Biometrics, despite its promising technology, is having difficulty generating profits. Having raised $85 million in an
Question:
Neptune Biometrics, despite its promising technology, is having difficulty generating profits. Having raised $85 million in an initial public offering of its stock early in the year, the company is poised to introduce a new product, an inexpensive fingerprint door lock. If Neptune engages in a promotional campaign costing $55 million this year, its annual after-tax cash flow over the next five years will be only $1 million. If it does not undertake the campaign, it expects its after-tax cash flow to be −$15 million annually for the same period. Assuming the company has decided to stay in its chosen business, is this campaign worthwhile when the discount rate is 8 percent? Why or why not? LO.1
Step by Step Answer:
Analysis For Financial Management
ISBN: 9781260772364
13th Edition
Authors: Robert Higgins, Jennifer Koski, Todd Mitton