Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. fasttrack bikes, ine. is thinking of developing a

FastTrack Bikes, Ine. is thinking of developing a new composite road bke. Devolopment wil take...

80.2K

Verified Solution

Question

Finance

image
FastTrack Bikes, Ine. is thinking of developing a new composite road bke. Devolopment wil take six years and the cost is \$192, coo per year Once in production, the biko is expoctod to make $268,800 per year for 10 years. Assume the cost of capital is 10% a. Calcilate the NPV of this irvestment opportunity, assuming all cash flows occur at the ond of each yoar. Should the company make the inveslrient? b. By how much must the cost of capital estimate devale to change the docision? (Hint Use Excel to calculate the IRRR: c. What is the NPV of the itvestment if the cost of capital is 13% ? Note: Assume that all cash flews occur at the end of the appropriate yoar and that the intlows do not start unbl year 7 a. Calculate the NPV of this investment opportunity, assuming all cash fows occur at the end of each year. Should the company make the imvedment? The present valuo of the costs is 5 (Round to the nearest dollar) The present value of the benefits is 5 (Round to the nearest dollar.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students