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You are thinking of making an investment in a new plant. The plant will generate revenues of $ 1 . 8 6 million per year

You are thinking of making an investment in a new plant. The plant will generate revenues of $1.86 million per year for as long as you maintain it. You expect that the maintenance costs will start at $104,160 per year and will increase 4% per year thereafter. Assume that all revenue and maintenance costs occur at the end of the year. You intend to run the plant as long as it continues to make a positive cash flow (as long as the cash generated by the plant exceeds the maintenance costs). The plant can be built and become operational immediately and the interest rate is 5% per year.
a. What is the present value of the revenues?
b. What is the present value of the maintenance costs?
c. If the plant costs $18.6 million to build, should you invest in the plant?
c. If the plant costs $18.6 million to build, should you invest in the plant? (Select the best choice below.)
A. The NPV is -$5,285,497, which is negative, so you should not invest in the new plant.
B. The NPV is $12,308,649, which is positive so you should invest in the new plant.
C. The NPV is $30,908,649, which is positive, so you should invest in the new plant.
D. The NPV is $36,194,146, which is positive, so you should invest in the new plant.
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