An experimental plant investment plan to generate electricity based on kryptonite requires investing $100 million at t = 0 and is expected to generate positive cash flows of $12 million for 25 consecutive years starting at t = 1. In year 25, an additional outflow of −$220 million is considered, as it will be very costly to dismantle the plant, taking care of radioactive contaminated materials.

a. Plot in a graph the NPV of the investment as a function of the discount rate.

b. In accordance with an economic criterion, for which range of discount rates does this investment make sense?

c. Would you invest in such an investment plan?