What is the npv of the project

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You are considering constructing a new plant in a remote wilderness area to process the ore from a planned mining operation. You anticipate that the plant will take a year to build and cost $102 million upfront. Once built, it will generate cash ?ows of $14 million per year starting two years from today. In 21 years, after its 20th year of operation, the mine will run out of ore and you expect to pay $178 million to shut the plant down and restore the area to its pristine state. Using a cost of capital of 12%:

a. What is the NPV of the project?

b. Is using the IRR rule reliable for this project? Explain.

c. What are the IRRs of this project?

Reference no: EM133120893

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