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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 $ 1 8 1

FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $ 181 comma 000 per year. Once in production, the bike is expected to make $ 271 comma 500 per year for 10 years. Assume the cost of capital is 10%.
a. Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment?
b. By how much must the cost of capital estimate deviate to change the decision? (Hint: Use Excel to calculate the IRR.)
c. What is the NPV of the investment if the cost of capital is 15%?
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)The annual free cash flows for years 1 to 10 of buying the chains is ?
(Round to the nearest dollar. Enter a free cash outflow as a negative number.)
(b)compute the NPV of buying the chains from FCF.
(c) Compute the initial FCF of producing the chains.
(d)Compute the FCF in years from 1 through 9 of producing the chains.
(e) Compute the FCF in year 10of producing the chains
(f) Compute the NPV of producing the chains from the FCF
(G) Compute the difference between the NPV found above.

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