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?
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?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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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
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