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FastTrack Bikes, inc, is thinking of developing a new composite road bike. Development will take six years and the coat is $211,800 per year. Once

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FastTrack Bikes, inc, is thinking of developing a new composite road bike. Development will take six years and the coat is $211,800 per year. Once in srosucfion, the bike is expected to maia $285,887 per year for 10 years. The cash inflows begin at the end of year 7 . For parts a-c, assume the cost of capital is 10.5%. a. Calculate the NPV of this investment opportunity. Should the company make the imestment? b. Calculate the IRR and use it to determine the maximum deviation allowable in the cost of captal estimate to leave the decision unchanged. c. How long must devolopment last to change the decition? For parts d.4, astume the oost of capilal is 14.1%. d. Calculate the NPV of this investment opportunity, Should the company make the investronen? e. How much must this cost of capial estimate deviate to change the decision? 1. How long must development last to change the decision? a. Caiculate the NPV of this investment opportunty, If the cont of capital is 10.5%, the NPV is 3 (Round to the nearest dotitat) FastTrack Bikes, inc, is thinking of developing a new composite road bike. Development will take six years and the coat is $211,800 per year. Once in srosucfion, the bike is expected to maia $285,887 per year for 10 years. The cash inflows begin at the end of year 7 . For parts a-c, assume the cost of capital is 10.5%. a. Calculate the NPV of this investment opportunity. Should the company make the imestment? b. Calculate the IRR and use it to determine the maximum deviation allowable in the cost of captal estimate to leave the decision unchanged. c. How long must devolopment last to change the decition? For parts d.4, astume the oost of capilal is 14.1%. d. Calculate the NPV of this investment opportunity, Should the company make the investronen? e. How much must this cost of capial estimate deviate to change the decision? 1. How long must development last to change the decision? a. Caiculate the NPV of this investment opportunty, If the cont of capital is 10.5%, the NPV is 3 (Round to the nearest dotitat)

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