Question
Fethe's Funny Hats is considering selling trademarked curly orange-haired curly wigs for University of Tennessee football games. The purchase cost for a 2-year franchise to
Fethe's Funny Hats is considering selling trademarked curly orange-haired curly wigs for University of Tennessee football games. The purchase cost for a 2-year franchise to sell the wigs is $20,000. If demand is good (40% probability), then the net cash flows will be $24,000 per year for 2 years. If demand is bad (60% probability), then the net cash flows will be $5,000 per year for 2 years. Fethe's cost of capital is 13%.
What is the expected NPV of the project?
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Financial Management Theory And Practice
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
3rd Canadian Edition
017658305X, 978-0176583057
