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Amalfi is considering investing in a new project. The project will generate revenues of $30 million in its first year of operation, and these revenues

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Amalfi is considering investing in a new project. The project will generate revenues of $30 million in its first year of operation, and these revenues will grow at the rate of 8% per year thereafter. The project also entails R&D expenditures of $14 million in the first year of operation and these expenditures are expected to grow at the rate of 11% per year. If the company decides to undertake the project now, it will become operational next year. The CFO recommends that the project be undertaken, but that it be pursued only as long as it yields a positive net cash flow. That is, it will be terminated when R&D expenditures are larger than revenues. The weighted average cost of capital is 11%. The firm must invest $150 million up front, and also disburse $40 million for clean-up costs during the last year of the project. If undertaken, the project will be pursued for years! will have a net present value of and the firm will a) 41 years: $5.486 million, invest b) 21 years; -$4.312 million, not invest 28 years; $14.685 million, invest d) 48 years; -$14.354 millions, not invest e) 46 years: $2.126 million, invest MacBook Air

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