This is my homework question with the answers I am not sure how they got the second answer or how to calculate the IRR I don't know how to use the formula

opening a new plant. The plant will cost $ 98.6

$98.6 million up front and will take one year to build. After that it is expected to produce profits of $ 31.9

$31.9 million at the end of every year of production(starting two years fromnow). The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 7.8 %

7.8%. Should theinvestment be made? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.

The NPV of the project will be $

280.8

280.8 million. (Round to one decimalplace.)

You should

make the investment. (Select from thedrop-down menu.)

The IRR is

25.73

1. 25.73%. (Round to two decimalplaces.)

The maximum deviation allowable in the cost of capital estimate is

17.93

17.93%. (Round to two decimalplaces.)