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You are considering making a movie. The movie is expected to cost $10.4 million upfront and take a year to make. After that, it is expected to make $4.4. million in the first year it is released (end of year 2) and $1.7 million for the following four years (end of years 3 through 6). What is the payback period of this investment? If you require a payback period of two years, will you make the movie? What is the NPV of the movies if the cost of capital is 10.3%? According to the NPV rule, should you make this movie?

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Financial Management, Finance

Category:- Financial Management
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