You Manage a New Product Development Team for an Electronics

question 49

Multiple Choice

You manage a new product development team for an electronics manufacturer, and your firm's policy is that all new projects must pay for themselves in the first five years. Your team has projected that the first year of the project requires an initial investment of $2 million with no revenue, the second year loss is $500,000, the net revenue for year 3 is zero, and you earn $1.8 million in both year 4 and year 5. If the opportunity cost of capital for your firm is 8%, should you go ahead with this project?

• A) No, the expected NPV is negative.
• B) Yes, the expected NPV is roughly $290,000.
• C) Yes, the expected NPV is $1.1 million.
• D) We do not have enough information to answer this question.

---

Definitions:

Antisocial Personality Disorder

A mental health disorder characterized by a long-term pattern of disregarding or violating the rights of others.

Manipulates

The act of controlling or influencing someone or something, often in a skillful manner and sometimes with negative connotations.

Manipulative Behavior

Actions designed to influence or control others in subtle or deceitful ways.

Personality Disorder

A type of mental disorder characterized by enduring maladaptive patterns of behavior, cognition, and inner experience, exhibited across many contexts and deviating from those accepted by the individual's culture.