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2. (15 points) A power company is preparing a bid to become the lead contractor on a nuclear power plant in Japan. The plant will
2. (15 points) A power company is preparing a bid to become the lead contractor on a nuclear power plant in Japan. The plant will be part of a new generation of smaller-scale pocket" power plants. It is estimated it will cost $2,620 million to construct and make operational including all the design work, safety testing, hiring and training of staff, and equipment. It is expected to generate cash of about $390 million per year for 10 years, at which point it will be shut down. To safely decommission the plant at that point in time will cost an estimated $890 million. Assume the firm has 5% cost of capital. a) Calculate the payback period. b) Calculate the pocket power plant project's discounted payback period. c) Calculate the system's NPV
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