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Snapchat is interested in developing its own phone to sell to consumers that focuses on photos and filters but doesnt make calls. The cost of
Snapchat is interested in developing its own phone to sell to consumers that focuses on photos and filters but doesnt make calls. The cost of development will be $100 million. Sales in the first 3 years are expected to be $40 million, $60 million, and $80 million while costs are expected to be $20 million in the first year and grow annually at 25%. One year after achieving $80 million in sales, Snapchat expects to sell off its phone business for $85 million. What is the NPV and should Snapchat pursue this project assuming the discount rate is 28% annually
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