Question: i need answer for second question An auto plant that costs $90 million to build can produce a new line of cars that will produce

i need answer for second question

An auto plant that costs $90 million to build can produce a new line of cars that will produce net cash flow of $20 million per year if the line is successful, but only $2 million per year if it is unsuccessful. You believe that the probability of success is about 80 percent. The auto plant is expected to have a life of 20 years and the opportunity cost of capital is 6 percent. What is the expected net present value of building the plant? Please state your answer in millions and in 2 decimal places. 98.11 Correct response: 98.110.02million If the plant could be sold for $135 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 Section Attempt 1 of 1 Verify

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

A company will sell Gizmos to consumers at a price of $84 per unit. The variable cost to produce Gizmos is $44 per unit. The company expects to sell 16,000Gizmos to consumers each year. The fixed...

An auto plant that costs $90 million to build can produce a new line of cars that will produce net cash flow of $20 million per year if the line is successful, but only $2 million per year if it...

Please answer both! Thumbs up! An auto plant that costs $55 million to build can produce a new line of cars that will produce net cash flow of $20 million per year if the line is successful, but only...

I Need help with question at the bottom. Thnx :) An auto plant that costs $90 million to build can produce a new line of cars that will produce net cash flow of $45 million per year if the line is...

1 2. A company will sell Thingamajigs to consumers at a price of $117 per unit. The variable cost to produce Thingamajigs is $40 per unit. The company expects to sell 16,000 Thingamajigs to consumers...

1. 2. Daily Enterprises is purchasing a $12,000,000 machine. The machine will be depreciated using straight-line depreciation over its 7 year life and will have no salvage value. The machine will...

An auto plant that costs $90 million to build can produce a new line of cars that will produce net cash flow of 550 million per year if the line is successful, but only $3.5 million per year if it is...

An auto plant that costs $90 million to build can produce a new line of cars that will produce net cash flow of $30 million per year if the line is successful, but only $8 million per year if it is...

I'm in second year university in Introduction to Finance and I'm struggling with this question. An auto plant that costs $50 million to build can produce a new line of cars that will produce net cash...

Capitalization of Interest Vania Magazine Company started construction of a warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2009, and completed the building on...

Briefly explain the morphological features protozoa. Give detailed answer.

Jackson Company 2 0 x 1 Plan assets January 1 , 2 0 x 1 2 0 0 , 0 0 0 PBO January 1 , 2 0 x 1 2 5 0 , 0 0 0 Annual service cost 1 6 , 0 0 0 Settlement rate and expected rate of return 1 0 % Actual...

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".