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Question 6. You are thinking of investing in a new plant. The plant can be built and become operational in 2 years and will work
Question 6. You are thinking of investing in a new plant. The plant can be built and become operational in 2 years and will work for 20 years after it becomes operational. The initial costs of building the plant are $5 million today and $2 million in year 1 . When the plant starts working, you expect the revenue to start at \$1 million per year and increase 5% per year until you shut down the plant after 20 years. Assume income occurs at the end of each year. What is the added value generated by this investment if the required return is 10%
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