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2. You are considering making a movie. The movie is expected to cost $10 million up front and take a year to make. After that,
2. You are considering making a movie. The movie is expected to cost $10 million up front and take a year to make. After that, it is expected to make $5 million in the year it is released and $2 million for the following four years. What is the payback period of this investment? If you require a payback cut-off period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10%? 7. Former U.S. President Harry Truman is purported to have complained that the problem with all economists is that they always have two hands. When asked to give advice, they always said, On the one hand ... but on the other hand
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