How much would the cost of capital have to increase

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Question: A manufacturer of video games develops a new game over two years. This costs $850,000 per year with one payment made immediately and the other at the end of two years. When the game is released, it is expected to make $1.2 million per year for three years after that. The net present value (NPV) of this investment at a cost of capital of 9% indicates that this is a worthwhile investment. By how much would the cost of capital have to increase for the NPV to be zero?

Reference no: EM133434941

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