R 12:30 X A: % O - of All Xx-NPV[A17, A1:A17) B 1 4 Fast Track Bikes, Inc. is thinking of developing a new composte road bike Development will take six years and the cost $206.600 per year. Once in production, the bike is expected to make $297 497 per you for 10 years. The cash flow begin at the end of year 7 For parts ac, stume the cost of capital is 92% Choudate the NPV of this investment opportunity. Should the company make the investment? 6. Calculate the IRR and use it to determine the macmum deviation alowable in the cost of capital estimate to leave the decision unchanged. c. How long must development ant to change the decision? For parts of assume the col capital 100% Calculate the NPV of this investment opportunity should the company make the invester? .. How much must this cost of capital estimate deviate to change the decision E How long development to change the decision? incorrect? why is this A -206000 -206000 -206000 -206000 -206000 -206000 297497 297497 297497 297497 297497 297497 297497 297497 297497 297497 9.20% HK$197,501.46 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 aculate the NPV of this investment opportunity It the cost of capital is 9,2%, the NPV 104,828 Round to the nearest dolar) Should the company make this investmer You answered: 197501 DA Accept the investment because the correct awer 104.826 Answer tolerance 10) O Reject the investment because that we feedback Reject the investment because the Accept the investment because the NPV is equal to or greater than zero (80). b. Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged