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GE is considering mass-production of a new jet engine. The initial investment is $1.5B. Over the next 5 years, GE will manufacture at full capacity
GE is considering mass-production of a new jet engine. The initial investment is $1.5B. Over the next 5 years, GE will manufacture at full capacity and sell 500 jet engines per year. If each engine yields $5M of free cash flows, how much is the NPV of this project? What if the size of the market is 400 (600) engines per year? What if the free cash flows per engine is $4M ($6M)? Assume a discount rate of 10%
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