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 $1.9 million for the following four years. Whatis the payback period of this investment? If you require a payback period of two years, will you make the movie? Doesthe movie have positive NPV if the cost of capital is 10.9% ? What is the payback period of this investment? Thepayback period is years. (Round to two decimal places.)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 $1.9 million for the following four years. Whatis the payback period of this investment? If you require a payback period of two years, will you make the movie? Doesthe movie have positive NPV if the cost of capital is 10.9%?What is the payback period of this investment?The payback period is years. (Round to two decimal places.)

Initial investment to make a movie: I = $10.2 millionMoney made in the first year: M1 = $4.7…

Answered: You are considering making a movie. The…

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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An investment project requires an initial payment of $500,000, and then will earn a constant return of $45,000 every year forever. Is this a profitable investment project? Oyes, it is profitable O you can't tell with this information Ono, it is not profitable
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. Consider the problem of investing in a risky project. A project costs $500. The annual cash flow for the first year are $60 and grows at the rate of 3% annually. The risk free rate is 5%. The company WACC is 12%. . Suppose the project has an option to let you wait and decide whether to accept the project. You can invest now or next year or in two years. At the end of 2 years you either invest in the project or lose it since further deferral is not possible. The project analyst has done the calculations and has produced the binomial tree showing the cash flows from the project at future dates. Calculate the NPV of the project. p_up 0.40 $80 $70 $60 $60 $50 $40 ○ $783.21 ○ $563.45 ○ $166.67 ○ $666.67
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