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Calculate the npv of investment opportunity

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Reference no: EM132383972

FastTrack? Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $209,600 per year. Once in? production, the bike is expected to make $297,155 per year for 10 years. The cash inflows begin at the end of year 7.

For parts? a-c, assume the cost of capital is 9.6%.

a. Calculate the NPV of this investment opportunity. Should the company make the? investment?

b. Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.

Reference no: EM132383972

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