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You are considering making a movie. The movie is expected to cost $ 10.1 million up front and take a year to produce. Afterthat, it
You are considering making a movie. The movie is expected to cost $ 10.1million up front and take a year to produce. Afterthat, it is expected to make $ 4.5million in the year it is released and $ 1.8million 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 10.2 %?
The answer of 4.1 years for payback period of this investment was wrong. I can't seem to figure out the right one.
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