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You are considering making a movie. The movie is expected to cost $10.2 million up front and take a year to produce. After that,
You are considering making a movie. The movie is expected to cost $10.2 million up front and take a year to produce. After that, it is expected to make $4.7 million in the year it is released and $1.7 million for the following four years. 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 10.4%?
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To calculate the payback period of the investment we need to determine how long it takes for the cumulative cash inflows to equal or exceed the initia...
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Fundamentals of Corporate Finance
Authors: Berk, DeMarzo, Harford
2nd edition
132148234, 978-0132148238
