Barnes' Bagles is considering manufacturing and selling a new bagel-shaped pizza--thick with a hole in the middle. Development will cost $100,000 and will take one year. If the pizzas are popular (80% probability) the cash flows will be $40,000 per year for 5 years starting in Year 1. If the pizzas are not a hit (20% probability) the cash flows will be $5,000 per year for 5 years. Calculate the ENPV of the project. Barnes' cost of capital is 10%. $18,855 $20,740 $22,815 $25,096 correct answer $27,606 DO NOT USE EXCEL
Barnes' Bagles is considering manufacturing and selling a new bagel-shaped pizza--thick with a hole in the middle. Development will cost $100,000 and will take one year. If the pizzas are popular (80% probability) the cash flows will be $40,000 per year for 5 years starting in Year 1. If the pizzas are not a hit (20% probability) the cash flows will be $5,000 per year for 5 years. Calculate the ENPV of the project. Barnes' cost of capital is 10%.
$18,855
$20,740
$22,815
$25,096 correct answer
$27,606
DO NOT USE EXCEL
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