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  • Oct 31, 2010, 04:32 PM
    blatrelle
    Calculating NPV
    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?

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