You are considering constructing a new plant in a remote wilderness area to process the ore from a planned mining operation. There is an up-front cost of $100 million and you anticipate that the plant will take a year to build. Once built, it will generate cash flows of $15 million at the end of every year over the life of the plant. The plant will be useless 20 years after its completion once the mine runs out of ore. At that point you expect to pay $200 million to shut the plant down and restore the area to its pristine state. Using a cost of capital of 12%.

(a) What is the NPV of this project? (3 points)

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