You are considering making a movie. The movie is expected to cost $10.4million upfront and take a year to make. Afterthat, it is expected to make $4.3 million in the first year it is released(end of year2 ) and $ $1.8million 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 10.6%?According to the NPVrule, should you make thismovie?

What is the payback period of thisinvestment?