A large company (company A) uses fermentation to produce a valuable industrial chemical. A startup company approaches A with a novel microbe that ill increase
the yield of the chemical so that profits will increase by $180000 a month. The engineers at company A also estimate that the increased production will
require additional maintenence costing $600000 in years 2 4 and 6 of the project.

a)Draw a clear cash flow diagram of the project from the standpoint of company A.

b)Calculate the present value of the project assuming a 15% annual interest rate applies.

c)Calculate the future value of the project under the same assumptions.

d) If a seven year license for the novel microbe costs $10 million should the investment be made (again assuming 15% apr)?

e) Make a graph of present value vs. interest rate for interest rates ranging from 0 to 30%