Given the following project description:
1.PHASE I Invest $18M in the first year for product research with an estimated 60% chance of success.
2.PHASE II Invest $10M, during the second year, in marketing, establishing a sales network and building production facilities if Phase I succeeds. If Phase I is unsuccessful, abandon project.
3.PHASE III Following Phase II, go into production with the following estimates of product acceptance and sales:
The question is:
Calculate the NPV of this project, based on a 12% cost of money. Use the discounted cash flow of each revenue/cost stream