You are considering constructing a new plant in a remote wilderness area to process the ore from a planned mining operation. You anticipate that the plant will take a year to build and cost

$104

million upfront. Once built, it will generate cash flows of

$15

million per year starting two years from today. In

21

years, after its

20th

year of operation, the mine will run out of ore and you expect to pay

$196

million to shut the plant down and restore the area to its pristine state. Using a cost of capital of

11%:

a. What is the NPV of the project?

b. Is using the IRR rule reliable for this project? Explain.

c. What are the IRRs of this project?