ou are considering making a movie. The movie is expected to cost

$10.2

million upfront and take a year to make. After that, it is expected to make

$4.9

million in the first year it is released (end of year 2) and

$1.9

million for the following four years (end of years 3 through 6). What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is

10.3%?