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FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $223,000 per year. Once
FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $223,000 per year. Once in production, the bike is expected to make $312,200 per year for 10 years. Assume the cost of capital is 14%. Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment? Reject NPV =125,263 Accept NPV=968,223 Accept NPV =968,659 Reject NPV =867,173
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