חוEDC40R5VYF G6&7YearD01231. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return,profitability index, and net present value of the proposed mine.2. Based on your analysis, should the company open the mine?*456789H J800Cash FlowB N M-$950,000,000190,000,000215,000,000225,000,000285,000,000275,000,000235,000,000205,000,000165,000,00075,000,000KE(9Kfio 11OOLAPCctriinsprt sc.-]deletebackspace1pause 3*FMostly sunnySSeth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, thecompany's geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productivefor eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to AlmaGarrett, the company's financial officer. Alma has been asked by Seth to perform an analysis of the new mine andpresent her recommendation on whether the company should open the new mine.St2WXAlma has used the estimates provided by Dan to determine the revenues that could be expected from the mine. She alsohas projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, itwill cost $950 million today, and it will have a cash outflow of $75 million nine years from today in costs associated withclosing the mine and reclaiming the area surrounding it. The expected cash flows each year from the mine are shown inthe following table. Bullock Mining has a 12 percent required return on all of its gold mines.3EDC4RFHOLD%5TG6V BH7Year01N234Ua8JCash Flow-$950,000,000190,000,000215,000,000225,000,000285.000.000IM(9ho▶BTK>OOLaltPPIP;ctriprt sedeletebackspacepauseA

Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Year 0 1 2 3 5 6 7 8 9 Cash Flow -$950,000,000 190,000,000 215,000,000 225,000,000 285,000,000 275,000,000 235,000,000 205,000,000 165,000,000 - 75,000,000 1. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, profitability index, and net present value of the proposed mine. 2. Based on your analysis, should the company open the mine?

Year 0 1 2 3 5 6 7 8 9 Cash Flow -$950,000,000 190,000,000 215,000,000 225,000,000 285,000,000 275,000,000 235,000,000 205,000,000 165,000,000 - 75,000,000 1. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, profitability index, and net present value of the proposed mine. 2. Based on your analysis, should the company open the mine?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 12P: After discovering a new gold vein in the Colorado mountains, CTC Mining Corporation must decide...

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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 compnay's financial officer alma has been asked by seth to perform an analysis of the new mine and present her recommendation on wheter the company should open the new mine. year cashflow 0 -625,000,000 1 70,000,000 2 129,000,000 3 183.000.000 4 235,000,000 5 210,000,000 6 164,000,000 7 108,000,000 8 86,000,000 9 -90,000,000 alma has used the estimates provided by dan to determine the revenues that could be expected form the mine. she also has projected the expense of opening the mine and the annual operating expenses. if the company opens the mine, it…
BULLOCK GOLD MININGSeth 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 $750 million today, and it will have a cash outflow of $105 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it. The expected cash flows…
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 also has projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $950 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…
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. www.themegallery.com Company Logo 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 $ 725 million today, and it will have a cash outflow of $80 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it.…
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 $650 million today, and it will have a cash outflow of $72 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…
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 $120 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…
Dr. Ron Patterson, the owner of Chadron Gold Mining, is evaluating a new gold mine in Colorado. Dr. Tawny Tibbits, the company's geologist, has just finished her analysis of the mine site. She has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Tawny has taken an estimate of the gold deposits to Dr. Pil Joon Kim, the company's financial officer. Pil Joon has been asked by Ron to perform an analysis of the new mine and present his recommendation on whether the company should open the new mine. Year Cash Flow 0 1 2 -$650,000,000 80,000,000 121,000,000 3 162,000,000 4 221,000,000 5 210,000,000 6 154,000,000 7 108,000,000 8 9 86,000,000 -72,000,000 Pil Joon has used the estimates provided by Tawny to determine the revenues that could be expected from the mine. He has also projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $650 million today, and it will have a…
I need this in Excel Worksheet to show formulas and calculations please. 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. Year Cash Flow0 −$625,000,0001 70,000,0002 129,000,0003 183,000,0004 235,000,0005 210,000,0006 164,000,0007 108,000,0008 86,000,0009 − 90,000,000 Alma has used the estimates provided by Dan to determine the revenues that could be expected from the mine. She also has projected the expense of opening the mine…
Your mining company is considering an expansion of operations into iron ore. Your engineers surveyed a particular piece of land three weeks ago (the survey cost $25,000) and concluded the following: • You can extract 1,000 tons of iron ore per year. • There are 4,000 tons of iron ore underneath this land. Once all the ore has been extracted, the project will cease to produce any revenues. • The price of ore will remain constant for the next 4 years. Currently ore sells for $100 per ton. • The operating cost to extract the ore will be $60 per ton for the next 4 years. . • We will need to invest in the equipment for this project right now for $100,000. . mention The equipment will be depreciated over a period of four years using the straight-line method, with an assumed salvage value of zero for tax purposes. At the end of year 4, we can sell the equipment involved in the project for $20,000. The expansion requires additional working capital (NWC) of $10,000 from the start (at time t=0)…
8. Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $23,100,000 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 90,000 tons Year 3: 100,000 tons Year 4: 110,000 tons Year 5: 130,000 tons Calculate the depletion expense for the next five years, and create the journal entry for year one.
A mining company in South Africa has discovered a new gold vein in a mountain 150 kilometers north of Johannesburg. SA Mining Corporation will have to decide if they should set up a mine in the newly discovered location. They will be using the most cost-effective, but environmentally damaging method of gold mining sulfuric acid extraction. To go ahead SA Mining Corporation must spend $900,000 on new mining equipment and pay $165,000 for its installation. The goldmine will make an annual profit contribution of $350,000 each year for the next five years of the extraction. SA’s cost of capital is 14% and assumes that cash flows occur at the end of each year. What is the NPV, and IRR of the project? [Note: you are supposed to show every step of your calculation and interpret the result.] Critically discuss how environmental effects should be considered when evaluating these types of projects (impact investing), include in your discussion the challenges in quantifying these issues in…
A mining company in South Africa has discovered a new gold vein in a mountain 150 kilometers north of Johannesburg. SA mining corporation will have to decide if they should set up a mine in the newly discovered location. They will be using the most cost effective, but environmentally damaging method of gold mining sulfuric acid extraction. To go ahead SA mining corporation must spend $900,000 on new mining equipment and pay $165,000 for its installation. The goldmine will make an annual profit contribution of $350,000 each year over the next five years of the extraction. SA’s cost of capital is 14% and assume that cash flows occur at the end of each year. What is the NPV, and IRR of the project? Critically discuss how environmental effects should be considered when evaluating these types of projects (impact investing), include in your discussion the challenges in quantifying these issues in finance decisions of business organizations?