WK5 number 6

You are considering making a movie. The movie is expected to cost

$ 10.5

million upfront and take a year to make. After that, it is expected to make

$ 4.4

million in the first year it is released (end of year2) and

$ 1.8

million for the following four years (end of years 3 through 6) . What is the payback period of this investment? If you require a payback period of two years, will you make the movie? What is the NPV of the movie if the cost of capital is

10.3 %?

According to the NPV rule, should you make this movie?

What is the payback period of this investment?

The payback period is

___________________

years. (Round up to nearest integer.)