A new marketing project requires initial research and development costs of $950,000 today with further investments of $190,000 and $142,500
in the fourth and sixth year, respectively.
Initially the project will lose $380,000 in its first year and then earn profits of $427,500 for the next four years followed by profits of $209,000 in the last two years. At the end of the project, its capital goods can be sold for an estimated $95,000.
If the cost of capital is 11%, should the marketing project be pursued?