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At what costs of capital the project is acceptable

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Reference no: EM132466020

Problem: Andrew Coal Mining, Inc. is considering opening a strip mine, the cost of which is $8.8 million. Cash flows will be $55.4 million, all coming at the end of one year. The land must be returned to its natural state at a cost of $50 million, payable after two years.

Explain your reasoning. At what costs of capital, the project is acceptable.

Plot the graph of NPV for this project.

Reference no: EM132466020

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