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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 $208,900

per year. Once in production, the bike is expected to make

294,566 per year for 10 years. The cash inflows begin at the end of year 7.

For parts d-f, assume the cost of capital is 13.4%.

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. How long must development last to change the decision?