FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $$206,500$ per year. Once in production, the bike is expected to make $$290,400$ per

year for $10$ years. The cash inflows begin at the end of year $7.$

Assume the cost of capital is $9\mathrm{.}5\%$ for parts $($a$),($b$),$ and $($c$)$ below.

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.

c$.$ With costs remaining at $$206,500$ per year, how long must development last to change the decision?

Assume the cost of capital is $14\mathrm{.}7\%$ for parts $($d$),($e$),$ and $($f$)$ 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 $$206,500$ per year, how long must development last to change the decision?