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Electro Company is planning to develop a new electric motorcycle. It estimates that it will need to invest $50 million in equipment and facilities. Its management team estimates that the new motorcycle will generate a net cash flow of $4 million in year 1, $10 million in year 2, $18 million in year 3, $27 million in year 4, and $35 million in year 5.

Assuming that Electro evaluates all investments using a 15% rate of return (i.e., discount rate), what is the NPV of this project? Should it proceed?

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Financial Management, Finance

Category:- Financial Management
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