1 What is the NPV for the following project given the...
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1 What is the NPV for the following project given the information provided below? Would you recommend conducting this project? Describe why you would or would not recommend conducting this project. NOTE: Show Your Calculations Five year product development from January 2022 through December 2026 $1,000,000 spent by the sponsoring company per year, each year for five years, to develop the product prior to regulatory approval and first commercial sale 0 Probabilities of Technical and Regulatory Success: I Year! Year 2 Year 3 Year 4 Year 5 1.10 30 50 80 90 a First product sale is forecast to occur in 2028 0 10 year P&L forecast is as follows: (000's) 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Sales $1,000 $2,000 $3,000 $4,000 $5,000 $7,000 $7,000 $5,000 $3,000 $2,000 Costs $1,000 $1,500 $2,000 $3,000 $4,000 $5,000 $4,500 $4,000 $3,500 $2,000 Success 95 90 .85 .80 .70 .65 .60 .55 .50 .50 Probability Cost of Capital: 7%
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