FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $195,000 per year. Once in production, the bike is expected to make $292,500 per year for 10 years. Assume the cost of capital is 10% Note: Assume that all cash flows occur at the end of the appropriate year and that the inflows do not start until year 7.

a) What is the present value of the costs?

b) What is the present value of the benefits?

c) The net present value is?

d) Should I accept the investment? Is the NPV positive or negative?

What if the cost of capital is now 13%?

a) What is the present value of the costs?

b) What is the present value of the benefits?

c) The net present value is?

d) Should I accept the investment? Is the NPV positive or negative?

Answer with short, concise steps of what you did. You must include what you inputted into a financial calculator for a thumbs-up. Do not attempt this problem without it.