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Suppose GeKay Inc. has a two-year lease over a small copper deposit; the government acquires all rights to the property at the end of the lease. It is known that the deposit contains eight million pounds of copper. Mining would involve a one-year development phase that would have an immediate (t=0) cost of $1.25 million. At the end of the development phase (at t=1), if GeKay decides to continue and mine the copper, GeKay would then pay all its extraction costs to a subcontractor, in advance, at a rate of 85 cents per pound (8 million pounds). This amounts to a cash payment of $6.8 million one year from now (at t=1). GeKay would also then (at t=1) sell the rights to the copper to be recovered (8 million pounds) to a third party at the spot price of copper at that time. Copper prices follow a process such that percentage price changes are normally distributed with mean 7% and standard deviation 20%; the current price is .95 cents per pound. The required return for copper mining projects is 10% and the riskless rate of interest (continuously compounded) is 5%.Determine thenet present valueNPVof GeKay's potential $1.25m mining venture with standard Discount Cash Flows (DCF) analysis and compare it to the NPV from Real Options analysis.
Question 1: Collect a current annual report (2009) of an Australia listed company. Select the firm that reported the following assets. Select BOTHtypes of assets. Proper
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Hi, I would like someone to accomplish my corporate finance paper Objectives o To understand the financial profile of the selected company. o To project future cash flows of the co
Ask questThe credit term "2/45 net 90" indicatesion #Minimum 100 words accepted#
QUESTION Assume Venture Healthcare sold bonds that a 10 year maturity, a 12% coupon rate with annual payments, and a $1,000 par value. a. Suppose that two years after the bo
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Question 1 : The history of federalism can be broken down into three (4 really but we'll just focus on 3) historical phases (Dual, Cooperative, and New). Discuss each phase and eva
Calculate monthly inventory turnover ratio
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