**Answer:**

First of all we need a discount rate, so I looked for similar questions and the discount rates went from 4% to 8%, so i decided to use 6%.

the company has 2 alternatives, keep operating in a competitive market or slash its prices to try to erase the competition.

the present value of the first alternative using the perpetuity formula = $10,000,000 / 0.06 = $166,666,667

the present value of the second alternative is:

PV of slashing costs = $1,000,000,000 / 1.06 = $943,396,226 + the present value of future net incomes

the present value of future net incomes = $50,000,000 / 0.06 = $833,333,333, but we must discount this number this terminal value applies to end of the current, not now: $833,333,333 / 1.06 = $786,163,552

the NPV of slashing prices = $786,163,552 - $943,396,226 = -$157,232,674, so it is definitely a very bad idea.