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Question: Assume that the R&D period is uncertain rather than a known 4 years. Find the breakeven R&D period.
Problem: Micro Motors is evaluating a new line of products that will require several years of R& amped. New lab Equipment that costs $200,000 is needed, and salaries and other expenses will cost $300,000 per year for 4 years. Revenues from the new products begin at the end of year 5, and they are $250,000 per year higher than expenses. If Micro Motors uses an interest rate of 10% and a time horizon of 20 years, what is the EAW of this product line?
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