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An auto plant that costs $50 million to build can produce a new line of cars that will produce net cash flow of $35 million
An auto plant that costs $50 million to build can produce a new line of cars that will produce net cash flow of $35 million per year if the line is successful, but only $1 million per year if it is unsuccessful. You believe that the probability of success is about 20 percent. The auto plant is expected to have a life of 12 years and the opportunity cost of capital is 10 percent. What is the expected net present value of building the plant? Please state your answer in millions and in 2 decimal places.
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