Innovation Company is thinking about marketing a new software product. Up-front costs to market and develop the product are $5 million. The product is expected to generate profits of $1 million per year for 10 years. The company will have to provide product support expected to cost $100,000 per year in perpetuity. Assume all profits and expenses occur atthe end of the year. What is the NPV of this investment if the cost of capital is 6%? Should the firm undertake the project?
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Innovation Company is thinking about marketing a new software product. Up-front costs to market and...
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