Question
Your employer, makes desserts. the firm utilizes the NPA technique to judge new investment projects. you are contemplating bringing a new product to market, called
Your employer, makes desserts. the firm utilizes the NPA technique to judge new investment projects. you are contemplating bringing a new product to market, called Totally nuts. it will cost you $5 million upfront to get the product ready for market. the expectation is that over a 4-year period, you will have positive net cash flows of $1 million in year 1, $1.3 million in year 2, $2 million in year 3 and $2.4 million in year 4. if you require a rate of return of 20%, should you take on the project? if require 12%, does this change your answer?
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