A small manufacturing plant costs $50 M today. It is expected to have the following cash flows:
Year 1: $5M. Year 2: $9 M, Year 3: $10 M, and Year 4 = $11M. Risk adjusted cost of capital is 15% and the company is projected to grow at a constant rate of 3% for perpetuity after year 4.
Do you advise to invest in this project, why? Show your work. If you use a financial calculator, describe which buttons do you push?