constructioll WI and building modifications wi chased for $230,000 (with a 10% rd), with a its y val 2 that it would decommission ue of the initial investment required for the plant? 6. Yankee Atomic Electric Co.announced Rowe nuclear plant at a n estimated cost of $247 million. The cost includes: when dismantling will begin. These $32 million to maintain the plant expenses will accrue at the rate of $4 million a year. b)S56.5 million for the cost ofbuild nga facility to storeitsspent fuel until it is shipped in 2000 to a permanent repository. This storage facility will be depreciated straight-line over its eight-year estimated life. c. $158.5 million for thecost of dismantling the plant in 2000 and disposing of its nuclear wastes. At the same time, Yankee Atomic estimated that decommissioning the plant in 1992, eight years earlier than its planned retirement in 2000, will save it $116 million ($14.5 million a year) before tax by enabling the utility to purchase cheaper electricity than Yankee Rowe could provide. In addition, Yankee Atomic said it had accumulated $72 million in a decom- missioning fund required by the Nuclear Regulatory Commission. a. What is the present value of Yankee's $247 million decommissioning cost? Assume a cost of capital equal to (12%)and a 34%tax rate. b. Taking into account the savings on the purchase of cheaper electricity, and the $72 mil- lion already set aside, how much additional money does Yankee Atomic have to set aside in 1992 to have enough money to pay for the decommissioning e c. What other factors might you consider in calculating the cost of decom