Question

# An auto plant that costs $140 million to build can produce a line of flexfuel cars that will produce cash flows

with a present value of $180 million if the line is successful but only $80 million if it is unsuccessful. You believe that the probability of success is only about 30%. You will learn whether the line is successful immediately after building the plant.

**a-1.** Calculate the expected NPV. **(Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Enter your answer in millions.)**

Suppose that the plant can be sold for $140 million to another automaker if the auto line is not successful.

**b-1. **Calculate the expected NPV. **(Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Enter your answer in millions rounded to 1 decimal place.)**

#### Top Answer

Npv=Pv of Cash... View the full answer