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Your firm is considering a project that will cost $4.55 million upfront, generate cash flows of $5 million per year for three years, and then have a cleanup and shutdown cost of $6 million in the fourth year. Assume a discount rate of 10% per annum, what is the NPV of this project?

a.

None of the other answers are true.

b.

The NPV of this project is $3.44 million.

c.

The NPV of this project is $3.34 million.

d.

The NPV of this project is $10.89 million.

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Q: What if your firm is considering a project that will cost 4.55 million upfront generate cash flows of 5 million per year for three years and then have a cleanup and shutdown cost of 6 million in the f?
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