You are considering constructing a new plant to manufacture a new product. You anticipate that the plant will take a year to build and cost

$96.7

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

$15.5

million at the end of every year over the life of the plant. The plant will wear out 20 years after its completion. At that point you expect to get

$9.8

million in salvage value for the plant. Using a cost of capital of

10.5%,

calculate the NPV. Assume the IRR is

13%.

Do the NPV and IRR rules agree in this case?

Calc NPV and IRR.