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What is the npv of the app

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Reference no: EM132911130

Problem 1: You finally get an invite to the Clubhouse app. After using it for a few hours, you realize that eventually not just everyone from a house gets invited, but it's the whole town. You also figure out it's like some crappy talk radio. Thus, you decide to start your own "exclusive" app. When thinking of a name, you decide you don't want to false advertise about how exclusive the app is or the quality of the content. You also need to piggyback off a music or movie title since you have no money for advertising. Thus, you decide to name the app after the live (band) song: "Sh*t towne." To start the app, you'll need to invest $6 million today and then $2 million next year. You then think you can make $450,000 per year for 7 years starting two years from today. This amount will then increase by 5% per year forever. If your discount rate is 12%, what is the NPV of the app?

Reference no: EM132911130

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