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An auto plant that costs $65 million to build can produce a new line of cars that will produce net cash flow of $30 million
An auto plant that costs $65 million to build can produce a new line of cars that will produce net cash flow of $30 million per year if the line is successful, but only $5.5 million per year if it is unsuccessful. You believe that the probability of success is about 70 percent. The auto plant is expected to have a life of 30 years and the opportunity cost of capital is 6 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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