The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, "This is agolden opportunity." The mine will cost $4,000,000 to open and will have an economic life of 11 years. It will generate a cash inflow of$505,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11years, the mine will be abandoned. Abandonment costs will be $560,000 at the end of Year 11. What is the IRR for the gold mine?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.IRR%

IRR is regarded as one of the most important Capital Budgeting Techniques.Internal rate of return is…

Answered: The Utah Mining Corporation is set to…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 40P

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The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, "This is a golden opportunity." The mine will cost $4, 000, 000 to open and will have an economic life of 11 years. It will generate a cash inflow of $505,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11 years, the mine will be abandoned. Abthe next 10 years. After 11 years, the mine will be abandoned. Abandonment costs will be $560,000 at the end of Year 11. a. What is the IRR for the gold mine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, “This is a golden opportunity.” The mine will cost $3,400,000 to open and will have an economic life of 11 years. It will generate a cash inflow of $445,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11 years, the mine will be abandoned. Abandonment costs will be $500,000 at the end of Year 11. a. What is the IRR for the gold mine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. The Utah Mining Corporation requires a return of 8 percent on such undertakings. Should the mine be opened? multiple choice Yes No
The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, "This is a golden opportunity." The mine will cost $3,000,000 to open and will have an economic life of 11 years. It will generate a cash inflow of $405,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11 years, the mine will be abandoned. Abandonment costs will be $460,000 at the end of Year 11. What is the IRR for the gold mine?
The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, “This is a golden opportunity.” The mine will cost $750,000 to open and will have an economic life of 6 years. It will generate cash inflow of $175,000 at the end of the first year, and the cash inflows are projected to grow at 5 percent per year for the next 5 years. What is the IRR for the gold mine?
A proposed gold mine would require the investment of $2.65 million at the beginning of the first year and a further investment of $4.6 million at the end of the first year. Mining operations are expected to yield annual year-end profits of $2 million starting in year three. The mine will sustain eight years of mining operations, once it reaches profit. At the end of the last year of operations, the mining company would also have to spend $2 million on environmental restoration. Would the project provide the mining company with a rate of return exceeding its 12% cost of capital? If the rate of return was 8%, how much more/less would the NPV be? Multiple Choice о O Yes, $769,255 More $1,498,732 No, $519,255 Less $1,498,732 Yes, $519,255 Less $1,498,732 Yes, $519,255 More $1,923,732 Yes, $519,255 More $1,498,732
Chî Mining Corporative is set to open a gold mine in Mansa. According to the evaluations made this far, the mine will cost 900,000 to open and will have an economic life of 11 years. It will generate a cash inflow of 175,000 at the end of the first year, and the cash inflows are projected to grow at 8% per year for the next 10 years. It is projected that the mine will be abandoned in the 11th year. Abandonment costs are expected to be 125,000 at the end of year 11. The required return for the investors is 10%. Using the internal rate of return (IRR), Should the mine be opened?
A new diamond deposit has been found in northern Alberta. Your researchers have determined that it will cost $2.5 million to purchase the land and prepare it for mining. At the beginning of both the second and third years, another $1 million investment will be required to establish the mining operations. Starting at the end of the second year, the deposit is expected to earn net profits of $3 million, which will be sustained for three years before the deposit is depleted. If the cost of capital is 16%, should your company pursue this venture? Provide calculations to support your decision.
Investment Criteria. The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, “This is a golden opportunity.” The mine will cost $750,000 to open and will have an economic life of 6 years. It will generate cash inflow of $175,000 at the end of the first year, and the cash inflows are projected to grow at 5 percent per year for the next 5 years. What is the IRR for the gold mine?
Investment Criteria. The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, “This is a golden opportunity.” The mine will cost $750,000 to open and will have an economic life of 6 years. It will generate cash inflow of $175,000 at the end of the first year, and the cash inflows are projected to grow at 5 percent per year for the next 5 years. What is the IRR for the gold mine? Please show the work.
A new diamond deposit has been found in northern Alberta. Your researchers have determined that it will cost $4.5 million to purchase the land and prepare it for mining. Starting at the end of the second year, the lode is expected to earn net profits of $3 million, which will be sustained for three years before the deposit is depleted. Calculate the IRR on the diamond mine. If the cost of capital is 21%, should the deposit be aquired?
Your company is planning to open a new gold mine which will cost $3million to build with the expenditure occurring at the end of year three years from today. The mine will bring year end after tax cash inflow of$2million at the end of two succeeding years. And then it will cost $0.5million to close down the mine at the end of third year of operation what is project IRR
Evelyn's Exotics and Aquatics Shoppe is considering investing $540,000 in a project. The project is expected to generate a cash inflow of $90,000 in the first year, $180,000 in the second year, $540,000 in the third year, $450,000 in the fourth year, and $0 in subsequent years. Calculate the project’s payback period in years. Round your answer to two decimal places in years. For example, if the payback period is 1 year and 6 months (1.5 years), enter “1.50”. If the payback period is 2 years and 3 months (2.25 years), enter “2.25”. If the payback period is 3 years and 4 months (3.3333 years), enter “3.33”.

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