Solution-Expected net present value of building the plant

Expected net present value of building the plant

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Reference no: EM132700948

An auto plant that costs $55 million to build can produce a new line of cars that will produce net cash flow of $25 million per year if the line is successful, but only $6.5 million per year if it is unsuccessful. You believe that the probability of success is about 25 percent. The auto plant is expected to have a life of 27 years and the opportunity cost of capital is 11 percent.

What is the expected net present value of building the plant?

Please state your answer in millions and in 2 decimal places.

Reference no: EM132700948

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Expected net present value of building the plant

Reference no: EM132700948

Reference no: EM132700948

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