# Net present value | Accounting homework help

1. The National Grid Corporation proposes to construct a new nuclear power plant to meet the increased demand for electricity. The plant will cost \$2.2 billion to build. Cash flows provided by the plant will amount to \$300 million per year for 15 years. At the end of year 15, the plant will be decommissioned. The cost of decommissioning is estimated to be \$900 million. Calculate the project’s NPV if the discount rate is 5%.
2. You have an opportunity to invest \$100,000 now in return for \$80,300 in one year and \$30,300 in two years. If your cost of capital is 9.2%, what is the NPV of this investment?
3. When would an investor risk investing in a negative net present value on equipment? Would an MRI or new hospital beds be worth the risk? Explain your answer.
4. A project has an initial cost of \$35,000, expected net cash inflows of \$9,000 per year for nine years, and a cost of capital of 14%. What is the project’s NPV?
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