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You are considering opening a new plant that will cost $100million upfront. After that, it is expected to produce profit of $30 million at the end of...
You are considering opening a new plant that will cost $100million upfront. After that, it is expected to produce profit of $30 million at the end of every year. The cash flow are expected to last forever. Calculate the NPV of this investment opportunity if your cast of capital is 8%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the costof capital estimateto leave the decision unchanged.