41

You are considering opening a new plant. The plant will cost $103.9 million upfront and will take one year to build. After that, it is expected to produce profits of 5.30 5 milion at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity your cost of capital is 6.8% Should you make the investment? Calculate the IRR Does the IRR rule agree with the NPV rule? Here is the cash flow timeline for this problem Year 1 Forever Cash Flow (5 million) - 1039 30.5 305 30.5 30.5 Calculate the NPV of this investment opportunity if your cost of capital 68% The NPV of this investment opportunity is miilios Round to one decimal place)