PDA

View Full Version : Calculating NPV


blatrelle
Oct 31, 2010, 04:32 PM
A plant cost a $100million dollars upfront. Afterwards it is expected to produce profits of $30 million at the end of every year. The cash flows will last forever. Calculate the NPV of this investment if the cost of capital is 8%? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of the capital estimate to leave the decision unchanged?