FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is per year. Once in production, the bike is expected to make per year for years. The cash inflows begin at the end of year 7. Assume the cost of capital is for parts (a), (b), and (c) below.

d. Calculate the NPV of this investment opportunity. Should the company make the investment?

e. How much must this cost of capital estimate deviate to change the decision?

f. With costs remaining at $200,000 per year, how long must development last to change the decision?