Question
Now assume that you believe that you can double your cash flows for the next 6 years in the toll road investment described in problem
Now assume that you believe that you can double your cash flows for the next 6 years in the toll road investment described in problem 6, if you cut back on maintenance. If you do this, though, you will no longer be able to operate it as a toll road after year 6 and will have to sell it to the government for $30 million. Assuming the cost of capital remains at 7%, what is the NPV of the project to you?
a.
-8.66
b.
3.57
c.
-2.56
d.
8.87
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