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Calculate the IRR and use it to determine the maximum deviation

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Question

1. You are considering opening a new plant. The plant will cost $100 million upfront. After that, it is expected to produce profits of $30 million of every year. The case flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 8%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation

 

Paper#31264 | Written in 18-Jul-2015

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