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Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company's geologist, 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 recommendation on whether the company should open the new mine. 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 $850 million today, and it will have a cash outflow of $75 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 that follows. Bullock has a 12 percent required return on all gold mines. Year 0 -850 million Year 1 170 million Year 2 190 million Year 3 205 million Year 4 265 million Year 5 235 million Year 6 170 million Year 7 160 million Year 8 105 million Year 9 -75 million 1. 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. (please be specific on how to use the formulas) 2. Based on your analysis, should the company open the mine?
How much money must you pay into an account at the end of each of 20 years in order to have $100,000 at the end of the 20th year? Assume that the account pays 6% per year, and round to the nearest $1. a. $2,718 b. $2,195 C. $1,840 d. $2,028.
Your company will generate $60,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 8.50 percent, what is the present value of the savings?
What is an advantage that the Du-Pont system of analysis offers over traditional ratio analysis? (Try and identify something original that your classmates have not yet mentioned.) Are there any disadvantages? Does the Du-Pont system analyze performan..
Review the Anthony's Orchard case study in the unit resources - develop a recommendation for the company, and this analysis will help you to support that recommendation.
After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only person voting for you. Schenkel has 385,000 shares outsta..
The Assignment for Accounting Modelling ACCT3003. Develop a spreadsheet model for a listed Australian company using advanced MS Excel functions as part of its construction with a written explanation of your financial model and how the output from ..
Assume that you wish to purchase a bond with a 30-year maturity, an annual coupon rate of 10 percent, a face value of $1,000, and semiannual interest payments. If you require a 9 percent nominal yield to maturity on this investment, what is the maxim..
assignment tasks resources requirements amp deliverablesthis project integrates multiple elements of valuation capital
Hart Enterprises recently paid a dividend, D0, of $2.75. It expects to have no constant growth of 25% for 2 years followed by a constant rate of 8% thereafter. The firm's required return is 10%.
Your brother has asked you to help him with choosing an investment. He has $6,000 to invest today for a period of two years. You identify a bank CD that pays an interest rate of 0.0400 annually with the interest being paid quarterly. What will be the..
Define the parameters and variables and write the equation for the following scenario to optimize the profit:
Sqeekers Co. issued 11-year bonds a year ago at a coupon rate of 7.7 percent. The bonds make semi annual payments and have a par value of $1,000. If the YTM on these bonds is 6 percent, what is the current bond price?
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