You are considering making a movie. The movie is expected to cost $ 10.6 million upfront and take a year to make. Afterthat, it is expected to make $ 4.8 million in the first year it is released(end of year2) and $ 2.1 million for the following four years(end of years 3 through6) . What is the payback period of thisinvestment? If you require a payback period of twoyears, will you make themovie? What is the NPV of the movie if the cost of capital is 10.8 %? According to the NPVrule, should you make thismovie?

What is the payback period of thisinvestment?

if you require payback period of two years, will you make the movie?

does the movie have positive NPV if the cost of capital is 10%?