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What is the expected net present value of building the plant

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An auto plant that costs $100 million to build can produce a new line of cars that will produce net cash flow of $30 million per year if the line is successful, but only $2 million per year if it is unsuccessful. You believe that the probability of success is about 40 percent. The auto plant is expected to have a life of 20 years and the opportunity cost of capital is 12 percent.

Problem 1: What is the expected net present value of building the plant? million.

Reference no: EM132944584

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