The project would require an outlay of $600,000, the amount being paid one year from now. Thereafter, the project will generate cash inflows of $250,000 annually over subsequent 8 years. It will then cost $200,000 to shut the project over the following year. Assume all cash flows occur at the end of the year.
What should the minimum price be set for the mill if the company decides against the commencement of project? The required rate of return is 15%