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Value of a mixed stream Cook Energy Ltd. plans to build a new low-cost nuclear power plant in France. The construction will cost 30 million
Value of a mixed stream Cook Energy Ltd. plans to build a new low-cost nuclear power plant in France. The construction will cost 30 million right now, but cash flows of 12 million will start arriving at the end of years 1 to 8. The plant will need to be decommissioned at the end of year 5 and will cost 45 million for land restoration, to be paid at the end of year 9. a. What is the total undiscounted cash flow associated with this project over its nine- year life? Given this answer, do you think Cook should accept this project? Why? b. Assuming an interest rate of 8%, calculate the net present value of the project. What if the interest rate is 15%? Comment on what you find
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