User Account

All Pages

What are the npv and irr of this project

Assignment Help Finance Basics
Reference no: EM131101158

After discovering a new gold vein in the Colorado Mountains CTC Mining Corporation must decide whether to mine the deposit. The most cost-effective method of mining gold is sulfuric acid extraction, a process that results in environmental damage. To go ahead with the extraction, CTC must spend $900,000 for new mining equipment and pay $165,000 for its installation. The gold mined will net the firm an estimated $350,000 each year over the 5-year life of the vein. CTC'S cost of capital is 14 percent. For the purposes of this problem, assume that the cash inflows occur at the end of the year.

a. What are the NPV and IRR of this project?

b. Should this project be undertaken, ignoring environmental concerns?

c. How should environmental effects be considered when evaluating this, or any other, project? How might these effects change your decision in part b?

Reference no: EM131101158

Questions Cloud

Estimate become more or less reliable : Discuss the effect of this drop in credit status on the company's WACC. If you have been using the yield to maturity for the firm's bonds as your estimate of the cost of debt capital and you use the same estimation procedure following the downgrade..
Do you believe that first amendment protects online speech : Do you believe that the First Amendment protects online speech, even if that speech is perceived by individuals or groups of individuals as offensive? Does society in general have the right to penalize persons or entities that express hateful or o..
Is this evidence that the theory is wrong : Is this evidence that the theory is wrong?
Component cost of preferred stock : XYZ, Inc. sold a 10% perpetual preferred stock offering with a $100 par value. The amount the firm received after flotation costs was $98.50. What is the component cost of preferred stock?
What are the npv and irr of this project : What are the NPV and IRR of this project? Should this project be undertaken, ignoring environmental concerns? How should environmental effects be considered when evaluating this, or any other, project? How might these effects change your decision in ..
Calculate the payback period for each case : the following expected annual cash flows'$30,000 $40,000 $50,000 $60,000 and $70,000.required:calculate the payback period for each case.
Gulf weighted average cost of capital : The Gulf Company's cost of equity is 16 percent. Its before-tax cost of debt is 13 percent, its average tax rate is 40 percent. Gulf does not have any preferred equity. If it's debt ratio is 30 percent, find Gulf's weighted average cost of capi..
Question regarding the tgif sportswear : The firm has a target debt-to-equity ratio of 40 percent. Its cost of equity is 14% and its cost of debt is 7%. The tax rate is 34%. Should TGIF Sportswear expand its T-shirt line?
Which project has the higher mirr : whose costs and cash flows are shown below:The projects are equally risky, and their cost of capital is 12%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Which project has the higher MIRR?

Reviews

Write a Review

Finance Basics Questions & Answers

  Hahn manufacturing is expected to pay a dividend of 100 per

hahn manufacturing is expected to pay a dividend of 1.00 per share at the end of the year d1 1.00. the stock sells for

  Calculate the wacc above the re break point

XYX corporation's capital structure calls for 60% debt and 40% common equity. The company's cost of debt is 8%. Retained earnings are estimated to be $160 million. The company's cost of retained earnings is 14% and the cost of external common equ..

  What is the correct way to annualize an interest rate in

what is the correct way to annualize an interest rate in financial decision

  Calculate the present value of 1000 zero-coupon bond with 5

calculate the present value of 1000 zero-coupon bond with 5 years to maturity if the required annual interest rate is

  What is the break-even cost per kilowatt-hour

You require a return of 9 percent and use a light fixture 500 hours per year. What is the break-even cost per kilowatt-hour?

  Npv on project-riggs corp

Riggs Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this action will result in additional cash flows of $286,333 over the next three years. If the discount rate is 17.5 percent, what is the NPV on th..

  Which type of budgeting system is most appropriate

In your professional judgment, which type of budgeting system is most appropriate for public administration? Why do you feel this way?

  It cost of equity is 12 the cost of preferred stock is 6

tico co. has a target capital structure of 20 preferred stock 40 common and 40 debt. it cost of equity is 12 the cost

  What is the company cost of equity

The Lo Tech Co. just issued a dividend of $2.30 per share on its common stock. The company is expected to maintain a constant 7 percent growth rate in its dividends indefinitely. If the stock sells for $43.10 a share, what is the company's cost of..

  A firm value perspective

Discuss the better arrangement from a firm-value perspective.

  If you need 6000 5 years from now how much of a deposit

deposits required. if you need 6000 5 years from now how much of a deposit must you make in your savings account each

  Marital deduction for gift tax purposes

They marry in October of 2015 at which time David transfers $100,000 into Rebecca's checking account. What is the value of David's marital deduction for gift tax purposes in year 2015?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd