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You are considering making a movie. The movie is expected to cost $ 1 0 . 2 million upfront and take a year to make.

You are considering making a movie. The movie is expected to cost $10.2 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 $1.9 million for the following 4 years (end of years 3 through 6). What is the payback period of this investment? If you require a payback period of 2 years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.4%?
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