Net Present Value and Taxes Associated Penguin Productions is evaluating a film project. The president of Associated Penguin estimates that the film will cost \(\$ 18,000,000\) to produce. In its first year, the film is expected to generate \(\$ 14,500,000\) in net revenue, after which the film will be released to video. Video is expected to generate \(\$ 7,000,000\) in net revenue in its first year, \(\$ 1,500,000\) in its second year, and \(\$ 500,000\) in its third year. For tax purposes, amortization of the cost of the film will be \(\$ 14,000,000\) in year 1 and \(\$ 4,000,000\) in year 2. The company's tax rate is 40 percent, and the company requires a 12 percent rate of return on its films.

Required
What is the net present value of the film project? To simplify, assume that all outlays to produce the film occur at time 0 . Should the company produce the film?