You must decide if you wish to invest in a new chemical plant. All relevant data are provided below (all dollar amounts are in millions):

The total duration of the project (construction and operation) is 16 years.

Land cost is -$10 and you sell the land at the end of the project for the same nominal price at which you bought it.

Construction takes two years and costs a total of -$120.

60% of the total depreciable capital is spent in the first year of construction and the remaining 40% in the second year.

30% of the total depreciable capital is subject to a 5-year MACRS depreciation schedule. The other 70% is subject to a 7-year MACRS depreciation schedule.

Working capital is -$50.

Startup cost is -$10.

The plant operates for 14 years

Sales are $130 in the first year of operation and increase at 2.0% per year each following year.

Annual COS_excl is -$80.

The overall tax rate is 35%.

The interest rate is 11%.

(a) What is the total depreciation allowance for the first year of operation?

(b) What is the nominal sales value in the final year of operation?

(c) What is the sum of the undiscounted cash flows for the entire project duration?

(d) What is the NPV?

(e) What is the IRR?

(f) Should you invest?