You are trying to invest in a two-year project to produce computers. The initial investment (fixed cost) for setting up the production machines is 300. Also, your forecast cash flow in year 1 is 100. The total world market for these computer parts (sales revenue) is 5,000 (as an expectation) in year two, and expect a market share of 20% in year two. Also, the expected variable cost in year two will be 70%. The risk-free rate is 1.5% and the market risk premium is 10%.

The risk of the project is the same as the risk of Window stock. Obtain the beta (7-year-monthly) from the NVIDIA website - type in Window company.

Obtain the NPV of the project and explain the decision and explain. If we are expecting 30% of the market share in year two, what is the NPV, will this affect your decision?