Please answer the second part B. An auto plant that costs $80 million to...
90.2K
Verified Solution
Link Copied!
Question
Finance
Please answer the second part B.
An auto plant that costs $80 million to build can produce a new line of cars that will produce net cash flow of $50 million per year if the line is successful, but only $5 million per year if it is unsuccessful. You believe that the probability of success is about 10 percent. The auto plant is expected to have a life of 10 years and the opportunity cost of capital is 9 percent. What is the expected net present value of building the plant? Please state your answer in millions and in 2 decimal places. - 19.03 Correct response: -19.030.02million If the plant could be sold for $125 million to another automaker in one year if the auto line is not successful, what is the expected net present value of building the plant? Please state your answer in millions and in 2 decimal places. Number million
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.