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statuscvo [17]
3 years ago
11

Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota, Dan Dority, the company’s geologi

st, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the company’s financial officer. Alma has been asked by Seth to perform an analysis of the new mine and present her recommendations an whether the company should open the new mine.
Year Cash Flow

0 -$650,000,000
1 80,000,000
2 121,000,000
3 162,000,000
4 221,000,000
5 210,000,000
6 154,000,000
7 108,000,000
8 86,000,000
9 -72,000,000

Alma has used the estimates provided by Dan to determine the revenues that could be expected from the mine. She has also projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost S650 million today, and it will have a cash outflow of S72 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it. The expected cash flows each year from the mine are shown in the table on this page. Bullock Gold Mining has a 12 percent required return on all of its gold mines.

Required:
Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, and net present value of the proposed mine.
Business
1 answer:
boyakko [2]3 years ago
4 0

Answer:

NPV is $28.5 million

Payback is 4.31 years

IRR is 13.25%

MIRR is 12.51%

Explanation:

The NPV,payback period,Internal rate of return and modified internal rate of return were computed in the attached spreadsheet.

Payback period=the year of the first positive cumulative cash flow+the year cumulative cash flow/the next year cash flow

the year of first positive cumulative flow is year 4

the cumulative cash flow for year 4 is $66 m

the next year cash flow is(year 5) is $210

payback=4.31

Download xlsx
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Throughout human history we know that Group of answer choices all countries will eventually return to very low levels of real GD
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Industrial revolution (industrialization) can be defined as a period of significant change in economic and social manufacturing process characterized by the use of handicrafts and agrarian methods to the use of power-driven equipments and machines. Basically, the industrial revolution began in Great Britain (England) between 1760 to 1840 and eventually spread across other countries of the world.

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Which action would a government most likely take to reduce its<br> unemployment rate?
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Explanation:

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