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Company x has a plant producing mountain bikes. The plant's current operations are estimated to generate a 10m cash flow per year (in perpetuity). The
Company x has a plant producing mountain bikes. The plant's current operations are estimated to generate a 10m cash flow per year (in perpetuity). The company is considering the option to halt the production of mountain bikes and invest 100m to reconvert the plant to produce electric bikes. This is estimated to increase total company cash flows from 10m to 20m per year in perpetuity. Assuming a 10% discount rate, the NPV of this project is
a. 100m
b. 0
c. 200m
d. 10m
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