Your firm is considering the launch of a new product. the XJ5. The upfront devel

Question

Your firm is considering the launch of a new product. the XJ5. The upfront development cost is $11 million, and you expect to earn a cash flow of $2.9 millin 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 $ (million) The NPV for a discount rate of 5% is $ (million)? The NPV for a discount rate of 10% is $ (million)? The NPV for a discount rate of 15% is $ (million)? The NPV for a discount rate of 20% is $ (million)? The NPV for a discount rate of 30% is $ (million)? Thankyou So Much!!!!

Explanation / Answer

Hi, Please find the answers as follows: 0% 11 - 14.50 = 3.5 million 5% 11 - 12.56 = 1.56 million 10% 11 - 11 = 0 15% 11 - 9.72 = 2.8 million 20% 11 - 8.67 = -2.33 million 25% 11 - 7.8 = -3.2 million 30% 11 - 7.06 = -3.94 million Thanks, Aman

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