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There is a new product launch, and the research and development costs are $40 million today. The product is expected to go on sale right
There is a new product launch, and the research and development costs are $40 | ||||||
million today. The product is expected to go on sale right away and is forecasted to | ||||||
produce year-end profits of $10 million the first year. From then on it is expected to | ||||||
grow a 5% for the next four years. Its last year will earn a projected $8 million in | ||||||
profit. The cost of capital for this project is 12% compounded annually. |
From a financial perspective only, should this new product be launched? | |||||||
15. What is the NPV after Initial Investment of this project? | |||||||
16. What is the Internal Rate of Return and how does it compare to the cost of capital? | |||||||
17. From a financial perspective only, should this new product be launched? |
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