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?
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?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 18EA: Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and...
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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?
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