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PLEASE ANSWER THE MISSING PARTS FOR C, D, E, AND F!! parts a-b is already done. Also ignore the answer in part d it is
PLEASE ANSWER THE MISSING PARTS FOR C, D, E, AND F!! parts a-b is already done. Also ignore the answer in part d it is wrong. Note for part d-f the cost of capital is 14%! for parts a-c the cost of capital is 10%
FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 per year for 10 years. The cash inflows begin at the end of year 7. For parts a-c, assume the cost of capital is 10.0%. a. Calculate the NPV of this investment opportunity. Should the company make the investment? b. Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. c. How long must development last to change the decision? For parts d-f, assume the cost of capital is 14.0%. 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? c. How long must development last to change the decision? For the decision to change, development must last years, or longer. (Round to two decimal places.) d. Calculate the NPV of this investment opportunity. Should the company make the investment? If the cost of capital is 13.7%, the NPV is $ - 119302. (Round to the nearest dollar.) e. How much must this cost of capital estimate deviate to change the decision? The maximum deviation is %. (Round to two decimal places.) f. How long must development last to change the decision? For the decision to change, development must last no longer than years. (Round to two decimal places.)Step by Step Solution
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