Halloween, Incorporated, is considering a new product launch. The firm expects to have an annual operating cash flow of $9.2 million for the next 8 years. The discount rate for this project is 13 percent for new product launches. The initial investment is $39.2 million. Assume that the project has no salvage value at the end of its economic life. |
a. |
What is the NPV of the new product? (Do not round intermediate calculations and |
After the first year, the project can be dismantled and sold for $26.2 million. If the estimates of remaining
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