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Blue Sky Mines has a cost of capital of 8% and is evaluating a capital budgeting proposal. The project has an initial cost of $26

Blue Sky Mines has a cost of capital of 8% and is evaluating a capital budgeting proposal. The project has an initial cost of $26 million and is expected to generate $5 million for 20 years before incurring shutdown costs of $15 million per year for 5 years. All cash flows are given on an after-tax basis. Find the IRRs for this project (there are 2). Plot the NPV profile. Why is the NPV profile humped?

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