Company Analysis : Randolph Mining Company

1370 WordsAug 10, 20146 Pages
Randolph Mining Company is a privately owned company. It was expertise in mining industry and produced the oil, coal and dealing with diverse ranges of minerals from last 20 years. They had made some major decision on Boraca project; one is bought the surface right immediately from Forquet (geologist) at $400000. Secondly, invest $62.1 million to build up sites for 20 years, which is associated with prudent risk or sell the right to the Interco for 5m that gives them immediate benefit to diversify their business in new location. However, these decisions could impact on RMC‘s growth strategies and put the business in higher risk. These are the issues that directly impact on RMC’ business process cause of Boraca deal. a) The site represents…show more content…
These leads to delay in operation process could difficult to meet the market demand on time. e) The Boraca site is possibly danger to attack by drugs cartel or guerrilla, so extra monetary budget will require to protect the site. If the incident happened in the near future, it could seriously damage the reputation and impact on financial performance. 2. Compare other investment analysis tools with NPV NPV is a popular method to evaluate the investment decision of a new project. Most of the managers are most likely to use NPV for investment decisions. Whether, company invests in new project or improving the existing business process to achieve financial objectives of an organisation. Such as Randolph Mining Company have an extensive experience in mining industry. Still it is not easy to make a quick decision to built up the site or selling the right to the competitors with immediate benefit. In this situation, various analysis tools are more appropriate to better judgement of project. However, NPV is one of the most appropriate tool to predict possible future cash inflows from the project. It provides the time value of money components within the estimated project period. Therefore, director’s can easily make a decision based on positive cash generation from the desired project period. Randolph can use Internal rate of Return
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