9. You are considering opening a new plant. The plant will cost $100 million up front and

will take one year to build. After that, it is expected to produce profits of $30 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 8%. 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.