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You are considering constructing a new plant to manufacture a new product. You anticipate that the plant will take a year to build and cost $100 million upfront. Once built, it will generate cash flow of $15 million at the end of every year over the life of the plant. The plant will wear out 20 years after its completion. At that point you expect to get $10 million in salvage value for the plant. Using a cost of capital (interest rate) of 12%, calculate the present Worth of the plant. Calculate the IRR.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91721812

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