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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
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 $103 million upfront. Once built, it will generate cash flows of $17 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 $237 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
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