Question $1$ You are considering making a movie. The movie is expected to cost $$$$10\mathrm{.}6$ million up front and take a year to produce. After$$ that, it is expected to make $$$$4\mathrm{.}9$ million in the year it is released and $$$$1\mathrm{.}6$ million for the following four years. What is the payback period of this$$ 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 $10\mathrm{.}7\%?$ Question $2$ Your factory has been offered a contract to produce a art for a new printer. The contract would last for three$$ years, and your cash flows from the contract would be $ $5\mathrm{.}00$ million per year. Your upfront setup costs to be ready to produce the part would be $ $8\mathrm{.}00$ million. Your discount rate for this contract is $8\mathrm{.}0\%.$

a$.$ What is the$$ IRR?

b$.$ The NPV is $ $4\mathrm{.}89$million$,$ which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV$$ rule?