Compass Minerals is thinking about opening a new salt mine. It has spent $10m on an environmental impact study, and expects to spent an additional $300 if the project goes ahead. They expect the project to produce $32m in free cash flow every year for the next 20 years, and believe that they will have to pay after-tax clean up costs of $100m when the project shuts down. The company has a Weighted Average Cost of Capital (WACC) of 8%.

a. What is the initial cost of this product?

b. What is the terminal cost of this project?

c. What is this project's NPV?

d. What is this project's IRR?

e. Will this project create value for the firm?