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You are considering opening a new plant. The plant will cost $98.2 million upfront. After that, it is expected to produce profits of $30.9 million
You are considering opening a new plant. The plant will cost $98.2 million upfront. After that, it is expected to produce profits of $30.9 million at the end of every year. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 6.2%. Should you make the investment? Calculate the IRR. Use the IRR to determine the maximum amount of estimation error allowable for the cost of capital estimate to leave the decision unchanged. Calculate the NPV of this investment opportunity if your cost of capital is 6.2%. The NPV of this investment opportunity is $400.2 million. (Round to one decimal place.) Should you make the investment? (Select the best choice below.) A. Yes, because the project will generate cash flows forever. B. No, because the NPV is not greater than the initial costs. No, because the NPV is less than zero. D. Yes, because the NPV is positive. Calculate the IRR. The IRR of the project is%. (Round to two decimal places.)
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