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You are considering making a movie. The movie is expected to cost $10.5 million upfront and take a year to make. After that, it is
You are considering making a movie. The movie is expected to cost $10.5 million upfront and take a year to make. After that, it is expected to make $4.2 million in the first year it is released (end of year 2) and $1.7 million for the following four years (end of years 3 through 6). What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.2%? What is the payback period of this investment? The payback period is years. (Round up to nearest integer.)
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