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1. A proposed nuclear power plant will cost $2.2 billion to build and then will produce cashflows of $800 million/year for 12 years. After that
1. A proposed nuclear power plant will cost $2.2 billion to build and then will produce cashflows of $800 million/year for 12 years. After that period (in year 12) it must be decommissioned at a cost of $10 billion. a. What is the project NPV if the discount rate is 5%? b. What is the project NPV if the discount rate is 18%? c. Discuss the differences between your answers for a. and b. When is the project acceptable/unacceptable, and why?
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