Your firm is considering the launch of a new product, the XJ5. The upfront development cost is $10 million, and you expect to earn a cash flow of $3.1 million per year for the next 5 years. Create a table for the NPV profile for this project for discount rates ranging from 0% to 30% (in intervals of 5%). For which discount rates is the project attractive? The NPV for a discount rate of 0% is $1.751 million. (Round to three decimal places.)

Your firm is considering the launch of a new product, the XJ5. The upfront development cost is $10 million, and you expect to earn a cash flow of $3.1 million per year for the next 5 years. Create a table for the NPV profile for this project for discount rates ranging from 0% to 30% (in intervals of 5%). For which discount rates is the project attractive? The NPV for a discount rate of 0% is $1.751 million. (Round to three decimal places.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter14: Real Options

Section: Chapter Questions

Problem 4MC

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