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

$4.7

million in the first year it is released (end of year 2) and

$1.7

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? Does the movie have positive NPV if the cost of capital is

10.9%?

Question content area bottom

Part 1

What is the payback period of this investment?

The payback period is

enter your response here

years.(Round up to nearest integer.)

Part 2

Based on the payback period requirement, would you make this movie?

NoNo

. (Select from the drop-down menu.)

Part 3

Does the movie have positive NPV if the cost of capital is

10.9%?

The NPV is

$enter your response here

million. (Round to three decimal places.)

Part 4

The movie has a

positive

NPV.(Select from the drop-down menu.)