You are considering opening a new plant. The plant will cost $95.1 million up front and will take one year to build. Af is expected to produce profits of $31.8 million at the end of every year of production. The cash flows are expected to forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.6%. Should you make the investr Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. The NPV of the project will be $ million. (Round to one decimal place.)
You are considering opening a new plant. The plant will cost $95.1 million up front and will take one year to build. Af is expected to produce profits of $31.8 million at the end of every year of production. The cash flows are expected to forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.6%. Should you make the investr Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. The NPV of the project will be $ million. (Round to one decimal place.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are considering opening a new plant. The plant will cost $95.1 million up front and will take one year to build. After that it is expected to produce profits of $31.8 million at the end of every year of production. The cash flows are expected to last forever. Calculate the
Transcribed Image Text:You are considering opening a new plant. The plant will cost $95.1 million up front and will take one year to build. After that it
is expected to produce profits of $31.8 million at the end of every year of production. The cash flows are expected to last
forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.6%. Should you make the investment?
Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the
decision unchanged.
The NPV of the project will be $ million. (Round to one decimal place.)
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