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You are considering making a movie. The movie is expected to cost $10.6 million up front and take a year to produce. Afterthat, it is
You are considering making a movie. The movie is expected to cost $10.6 million up front and take a year to produce. Afterthat, it is expected to make $4.4 million in the year it is released and $1.8 million for the following four years. What is the payback period of thisinvestment? If you require a payback period of twoyears, will you make themovie? Does the movie have positive NPV if the cost of capital is 10.9%?
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