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Unformatted text preview: 30,000,000.00 PAYOFF OF PROFIT IF NOT SUCCESSFUL 3,000,000.00 EXECTED PAYOFF 21,900,000.00 DISCOUNT RATE 15% INITIAL COST, IF SEGMENT LAUNCHED 1,000,000.00 NPV OF CUSTOMER RESEARCH 18,043,478.26 Because NPV is positive, the firm should launch customer research segment Question (a) Returns on Stock YEAR 1 216.00% 2.1600 YEAR 2 21.00% 0.2100 YEAR 3 4.00% 0.0400 YEAR 4 16.00% 0.1600 YEAR 5 19.00% 0.1900 AVERAGE RETURN 0.5520 INFLATION RATE 4.20% 0.0420 REAL RETURN 48.94% 0.4894 Question (b) Returns on Stock YEAR 1 216.00% 2.1600 YEAR 2 21.00% 0.2100 YEAR 3 4.00% 0.0400 YEAR 4 16.00% 0.1600 YEAR 5 19.00% 0.1900 AVERAGE RETURN 0.5520 AVERAGE TBILL RATE 5.10% 0.0510 RISK PREMIUM 50.10% 0.5010...
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 Fall '09
 Siad
 Depreciation, Corporate Finance, corporate tax rate, Unit selling price, initial investment, rate Discount rate

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