A company is thinking about marketing a new product. Up-front costs to market and develop...
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A company is thinking about marketing a new product. Up-front costs to market and develop the product are $26M. The product is expected to generate profits of $23M per year for 21 years. The company will have to provide product support expected to cost $10M per year in perpetuity. Furthermore, the company expects to invest $6M per year for 11 years for renovations on the product. This investing would start at the end of year 13. Assume all profits and expenses occur at the end of the year. Calculate the NPV of this project if the interest rate is 13%.
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