Question

Asked Oct 31, 2019

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A proposed nuclear power plant will cost $2.7 billion to build and then will produce cash flows of $350 million a year for 15 years. After that period (in year 15), it must be decommissioned at a cost of $950 million.

**a. **What is the NPV of the project if the discount rate is 3%?

**b. **What is the NPV of the project if the discount rate is 16%?

Step 1

**Part A & B:**

**Calculation of NPV at Discount Rate of 3% and 16%:**

The NPV at discount rate of 3% is **$868,508,430.34**.

The NPV at discount rate of 16% is **-$851,121,006.37**.

**Excel Spreadsheet:**

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