You work for ConstCo, a medium-sized engineering and construction company with annual profits of about $100 million. You recently entered as a contractor into a bidding process for a large construction project. The total (projected) cost for the project will be about $500 million. The project will have a duration of 5 years, and the following estimated cost will occur throughout the five years (assume all cash flows occur at the end of a year):

Year 1: $200 million

Year 2: $100 million

Year 3: $100 million

Year 4: $50 million

Year 5: $50 million

The project is auctioned on a lump-sum turnkey contract, i.e. you as the contractor will receive a fixed payment for the project. Your sales manager is convinced that you can win the bidding process for a bid of about $650 million, with 20% being paid after the first year, 10% after years 2-4, and the final 50% being paid upon completion.

Your finance department suggests using an interest rate of 15% for this project, since it represents considerable risks, like your client defaulting or actual costs being very different from your estimates.

Calculate the Net Present Value for this project.