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Determine the maximum deviation allowable

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Reference no: EM132238948

You are considering opening a new plant. The plant will cost $ 102.1 million up front and will take one year to build. After that it is expected to produce profits of $ 30.5million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8.3 % Should you make the? investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.

  • The NPV of the project will be $million. ?(Round to one decimal? place.)
  • You make the investment. ?(Select from the? drop-down menu.)
  • The IRR is ?%. (Round to two decimal? places.)
  • The maximum deviation allowable in the cost of capital estimate is ?%.

Reference no: EM132238948

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