FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $201,000 per year. Once in production, the bike is expected to make $291,805 per year for 10 years. The cash inflows begin at the end of year 7.For parts a-b, assume the cost of capital is 9.7%.

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

b. Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.

If the cost of capital is 9.7%, the NPV is $nothing.

For part c, assume the cost of capital is

14.9%.

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

a. Calculate the NPV of this investment opportunity.

If the cost of capital is

9.7%,

the NPV is

$nothing.

(Round to the nearest dollar.)

Should the company make this investment?(Select the best choice below.)