Hello, I am not so sure on how to deal with this question. I know that the formula of NPV is PV(inflows) - PV(outflows), and the question has given that the PV(outflows) is 100m, so NPV should be PV(inflows) - 100m. However, I am not so sure on the PV(inflows) because this project starts to produce cash flows at time t=2 rather than t=1. So I wonder do I still need to use the formula of PVperpetuity which is C/r? Is it correct that the NPV is (30m8%)-100m = 275m?

Question 2: You are considering opening a new plant. The plant will cost $100 million upfront and will take one year to build (i.e., it starts to produce cash ows at time t=2). After that, it is expected to produce prots of $30 million at the end of every year of production. The cash ows are expected to last forever. a. Calculate the NPV of this investment opportunity if your cost of capital is 8%. Should you make the investment