2. (6 points) A company decides to invest in upgraded cloud storage for their online businesses. It costs them $15,000,000 upfront. For the next five years, revenue is expected to increase by $3 million, $4 million, $6 million, $9 million, and $10 million, respectively. Each year, however, the company will have increased costs of 20% of revenue. If the cost of capital is 13% what is the NPV?
2. (6 points) A company decides to invest in upgraded cloud storage for their online businesses. It costs them $15,000,000 upfront. For the next five years, revenue is expected to increase by $3 million, $4 million, $6 million, $9 million, and $10 million, respectively. Each year, however, the company will have increased costs of 20% of revenue. If the cost of capital is 13% what is the NPV?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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