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

$ 100

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

$ 14

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

$ 180

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?