Fasttrack? bikes, inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 per year for 10 years. The cash inflows begin at the end of year 7. Assume the cost of capital is 10.0% for parts (a), (b), and (c) below. What is the NPV of this investment opportunity? Should the company make the investment?
a) $479,860; Yes
b) $479,860; No
c) $479,860; Insufficient information provided
d) $479,860; Need additional financial analysis