THIS QUESTION HAS THREE PARTS You are considering making a movie. The movie is expected to cost $20 million up front (at t=0) and take a year to produce. After that, it is expected to generate positive cash flow of $14 million in the year it is released (at t=2). In year 3, the film is expected to generate $4.2 million as a result of DVD sales, with cash flows decreasing by 25% in perpetuity from then on. The timeline for this project is provided below: t= 0 1 2 3 4 CF ($million) -20 14 4.2 3.15 Question A: If your movie studio makes investment decisions based solely on a required payback period of three years, would you make this movie? O A. YES B. NO O C. There is not enough information to answer this question. Question B: If your firm's cost of capital is 10%, what is the NPV of this opportunity? (Choose the most appropriate answer) A. $1.49 million B. $0.59 million C. $3.57 million O D. $26.28 million O E. $6.00 million Question B: If your firm's cost of capital is 10%, what is the NPV of this opportunity? (Choose the most appropriate answer) O A. $1.49 million B. $0.59 million C. $3.57 million D. $26.28 million E. $6.00 million Question C: The profitability index of this film is closest to which of the following? A. .0675 B. 0255 O C. .0744 D. .0856 O E..0900