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A device captures waste heat from a nuclear reactor and allows it to be converted and sold as energy to nearby plants. The nuclear company
A device captures waste heat from a nuclear reactor and allows it to be converted and sold as energy to nearby plants. The nuclear company has a remaining 2 years before it will be shut down. The initial cost of the device is 500,000. When installed in year 0 it produces 100,000 net revenue (revenue net of operating cost) one year later and 500,000 two years later. The nuclear company uses a high discount rate of 20% because it has other productive uses for its cash. What is the NPV for installing this device? HINT: a discount rate of 20% means that the discount factor to multiply year 1 cash flow by is 1/(1+0.2)=1/1.2
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