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Energy for Farms estimates that the NPV of its expected flows from a new processing plant has a cost of 40 million. The administration is

Energy for Farms estimates that the NPV of its expected flows from a new processing plant has a cost of 40 million. The administration is evaluating an additional increase in investment of 30 million that will give greater flexibility to switch between coal and natural gas as a source of energy. The original plant uses only coal. The option to switch to a cheaper source of energy when possible has an estimated value of 120 million. 



What is the value of the new plant including the real option to use alternative energy sources?

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