Cost of capital estimate to leave decision unchanged

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You are considering opening a new plant. The plant will cost $101.6 million upfront. After? that, it is expected to produce profits of $28.5 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 8.9%. Should you make the? investment? Calculate the IRR. Use the IRR to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.

Reference no: EM131526794

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