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Company A makes an upfront investment of $3M to launch the development of a new product line. After 2 years of development, the company must
Company A makes an upfront investment of $3M to launch the development of a new product line. After 2 years of development, the company must invest $2M to set up a production line for the new product. Sales will last for 10 years. First-year sales are expected to be $1M. They will grow at 25% per year for the next 4 years and then decline at 25% per year for the final 5 years. Using an interest rate of 10%, what this the NPV for this project?
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