#11 NPV A proposed nuclear power plant will cost 2.2 to build and then will produce cash flow of 3 million per year for 15 years. After that period (in 15 years) it must be decommissioned at a cost of 900 million. What is the project NPV if the discount rate is 5%? What is the discount rate at 18%?

#11 NPV A proposed nuclear power plant will cost 2.2 to build and then will produce cash flow of 3 million per year for 15 years. After that period (in 15 years) it must be decommissioned at a cost of 900 million. What is the project NPV if the discount rate is 5%? What is the discount rate at 18%?

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Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 11PROB

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

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#11 NPV

A proposed nuclear power plant will cost 2.2 to build and then will produce cash flow of 3 million per year for 15 years. After that period (in 15 years) it must be decommissioned at a cost of 900 million.

What is the project NPV if the discount rate is 5%?
What is the discount rate at 18%?

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