You own a coal mining company and are considering opening a new mine. The mine itself will cost $120 million to open. If this money is spent immediately, the mine will generate $20 million for the next 10 years. After that, the coal will run out and the site must be cleaned and maintained at environmental standards. The cleaning and maintenance are expected to cost $2 million per year in perpetuity. The cost of capital is 8%

a. What is the NPV of this opportunity if we assume that cleaning and maintenance cost start in year 10?

b. For which values of discount rates the IRR rule would suggest that you should accept this opportunity? Use a graph in Excel.