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ou are considering making a movie. The movie is expected to cost $10.6 million up front and take a year to produce. Afterthat, it is

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

$10.6

million up front and take a year to produce. Afterthat, it is expected to make

$4.6

million in the year it is released and

$1.9

million for the following four years. 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

10.1%?

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