Question
Buffy the Vampire Slayer is creating her own slaying company. All the trademarks cost her $150,000 today but shes sure itll pick up soon. Best
Buffy the Vampire Slayer is creating her own slaying company. All the trademarks cost her $150,000 today but shes sure itll pick up soon. Best case scenario, next year shell be earning $75,000 and then $50,000 in years 2 and 3, followed by $90,000 in years 4 and 5. These numbers are, of course, dependent on vampire slaying needs in the community. There is a worst case scenario where she only earns $35,000 in the first 3 years then $40,000 in the next 2. The most likely outcome though is earning $45,000 in the first year, $50,000 in year 2, $60,000 in year 3, then $50,000 in year 4, and $45,000 in year 5. If the relevant interest rate was 15%, would you recommend the project? Why or why not?
(Use Excell and use your knowledge about NPV, IRR, and scenario analysis method)
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