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An auto plant that costs $140 million to build can produce a line of flexfuel cars that will produce cash flows with a present value
An auto plant that costs $140 million to build can produce a line of flexfuel cars that will produce cash flows with a present value of $190 million if the line is successful but only $70 million if it is unsuccessful. You believe that the probability of success is only about 30%. You will learn whether the line is successful immediately after building the plant. a-1. Calculate the expected NPV. (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Enter your answer in millions rounded to 1 decimal place.) Expected NPV $ million a-2. Would you build the plant? Yes No Suppose that the plant can be sold for $120 million to another automaker if the auto line is not successful. b-1. Calculate the expected NPV. (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Enter your answer in millions rounded to 2 decimal places.) Expected NPV $ million
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