Answer:
Payback period = 3.57 years; No, dont make the movie based on payback period of 2years
NPV=$1.479 million; Yes, make the movie based on NPV is positive
Explanation:
The movie will show sign of recovering after the end of the 3rd year.
Therefore, Payback period = 3 + (1.2/2.1)
Payback period = 3 + 0.57
Payback period = 3.57
No, I would not make the movie if i require a payback period of 2years.
NPV = -(10.8/1.108)+(4.8/1.108²)+(4.8/1.108³)+(2.1/1.108⁴)+(2.1/1.108⁵)+(2.1/1.108⁶)
NPV = -9.747+3.91+3.529+1.393+1.2575+1.136
NPV=$1.479 million
Yes, make the movie since NPV is positive.