Perform a ror analysis that provide type of cash flowsseries

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Sept-Iles Aluminum Company operates a bauxite mine to supply its aluminum smelter located about 2 km from the current open pit. A new branch for the pit is proposed that will supply an additional 10% of the bauxite currently available over the next 10-year period. The lease for the land will cost $400,000 immediately. The contract calls for the restoration of the land and development as part of a state park and wildlife area at the end of the 10 years. This is expected to cost $300,000. The increased production capacity is estimated to net an additional $75,000 per year for the company. Perform an ROR analysis that will provide the following information:

(a) Type of cash flowsseries and possible number of ROR values

(b) PW graph showing all i* values

(c) Actual i* values determined using the ROR relation and spreadsheet function

(d) Conclusions that can be drawn about the correct rate of return from this analysis

Reference no: EM13881751

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