You are the financial manager of the utility company American Power Inc. and you are considering the construction of a nuclear power plant. The proposed facility costs $2,400 million to build, then it will produce cash flows of $300 million at the end of every year for 12 years, and eventually it is decommissioned at a cost of $850 million at the end of year 12. What is the NPV of the nuclear power plant? Assume an interest rate of 15% per year. Answer in millions of dollars with 2 decimals (for example, if your answer is 1,000,000 enter 1.00). Also, if you answer is negative put a negative sign in your answer.
You are the financial manager of the utility company American Power Inc. and you are considering the construction of a nuclear power plant. The proposed facility costs $2,400 million to build, then it will produce cash flows of $300 million at the end of every year for 12 years, and eventually it is decommissioned at a cost of $850 million at the end of year 12. What is the NPV of the nuclear power plant? Assume an interest rate of 15% per year. Answer in millions of dollars with 2 decimals (for example, if your answer is 1,000,000 enter 1.00). Also, if you answer is negative put a negative sign in your answer.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
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