Case synopsis: Company S, who is the owner of Gold Mining B, is assessing a new gold mine in State SD. Person D, the geologist of the company, has completed the mine site analysis. He has projected that the mine will be productive for eight years, after that the gold will be fully mined. Person D has taken the gold deposits estimate to Person A, the financial officer of the company. He is estimating whether the company must open a new mine. Person A has projected that if the firm opens the new mine, then it would cost $450 million at present, and it would have a cash outflow of $70 million at nine years from the present. Adequate information: The estimate of Person A also includes the estimates of Person D to identify the income from the mine. To discuss: Whether the company must open a mine.

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Answer 1

Question

Chapter 9, Problem 2M

Summary Introduction

Case synopsis:

Company S, who is the owner of Gold Mining B, is assessing a new gold mine in State SD. Person D, the geologist of the company, has completed the mine site analysis. He has projected that the mine will be productive for eight years, after that the gold will be fully mined. Person D has taken the gold deposits estimate to Person A, the financial officer of the company. He is estimating whether the company must open a new mine.

Person A has projected that if the firm opens the new mine, then it would cost $450 million at present, and it would have a cash outflow of $70 million at nine years from the present.

Adequate information:

The estimate of Person A also includes the estimates of Person D to identify the income from the mine.

To discuss: Whether the company must open a mine.

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Answer 2

Question

Chapter 9, Problem 2M

Summary Introduction

Case synopsis:

Company S, who is the owner of Gold Mining B, is assessing a new gold mine in State SD. Person D, the geologist of the company, has completed the mine site analysis. He has projected that the mine will be productive for eight years, after that the gold will be fully mined. Person D has taken the gold deposits estimate to Person A, the financial officer of the company. He is estimating whether the company must open a new mine.

Person A has projected that if the firm opens the new mine, then it would cost $450 million at present, and it would have a cash outflow of $70 million at nine years from the present.

Adequate information:

The estimate of Person A also includes the estimates of Person D to identify the income from the mine.

To discuss: Whether the company must open a mine.

Expert Solution & Answer

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Answer 3

Question

Chapter 9, Problem 2M

Summary Introduction

Case synopsis:

Company S, who is the owner of Gold Mining B, is assessing a new gold mine in State SD. Person D, the geologist of the company, has completed the mine site analysis. He has projected that the mine will be productive for eight years, after that the gold will be fully mined. Person D has taken the gold deposits estimate to Person A, the financial officer of the company. He is estimating whether the company must open a new mine.

Person A has projected that if the firm opens the new mine, then it would cost $450 million at present, and it would have a cash outflow of $70 million at nine years from the present.

Adequate information:

The estimate of Person A also includes the estimates of Person D to identify the income from the mine.

To discuss: Whether the company must open a mine.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 2M

Summary Introduction

Case synopsis:

Company S, who is the owner of Gold Mining B, is assessing a new gold mine in State SD. Person D, the geologist of the company, has completed the mine site analysis. He has projected that the mine will be productive for eight years, after that the gold will be fully mined. Person D has taken the gold deposits estimate to Person A, the financial officer of the company. He is estimating whether the company must open a new mine.

Person A has projected that if the firm opens the new mine, then it would cost $450 million at present, and it would have a cash outflow of $70 million at nine years from the present.

Adequate information:

The estimate of Person A also includes the estimates of Person D to identify the income from the mine.

To discuss: Whether the company must open a mine.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 2M

Summary Introduction

Case synopsis:

Company S, who is the owner of Gold Mining B, is assessing a new gold mine in State SD. Person D, the geologist of the company, has completed the mine site analysis. He has projected that the mine will be productive for eight years, after that the gold will be fully mined. Person D has taken the gold deposits estimate to Person A, the financial officer of the company. He is estimating whether the company must open a new mine.

Person A has projected that if the firm opens the new mine, then it would cost $450 million at present, and it would have a cash outflow of $70 million at nine years from the present.

Adequate information:

The estimate of Person A also includes the estimates of Person D to identify the income from the mine.

To discuss: Whether the company must open a mine.

Answer 6

Chapter 9, Problem 2M

Summary Introduction

Case synopsis:

Company S, who is the owner of Gold Mining B, is assessing a new gold mine in State SD. Person D, the geologist of the company, has completed the mine site analysis. He has projected that the mine will be productive for eight years, after that the gold will be fully mined. Person D has taken the gold deposits estimate to Person A, the financial officer of the company. He is estimating whether the company must open a new mine.

Person A has projected that if the firm opens the new mine, then it would cost $450 million at present, and it would have a cash outflow of $70 million at nine years from the present.

Adequate information:

The estimate of Person A also includes the estimates of Person D to identify the income from the mine.

To discuss: Whether the company must open a mine.

Answer 7

Chapter 9, Problem 2M

Summary Introduction

Case synopsis:

Company S, who is the owner of Gold Mining B, is assessing a new gold mine in State SD. Person D, the geologist of the company, has completed the mine site analysis. He has projected that the mine will be productive for eight years, after that the gold will be fully mined. Person D has taken the gold deposits estimate to Person A, the financial officer of the company. He is estimating whether the company must open a new mine.

Person A has projected that if the firm opens the new mine, then it would cost $450 million at present, and it would have a cash outflow of $70 million at nine years from the present.

Adequate information:

The estimate of Person A also includes the estimates of Person D to identify the income from the mine.

To discuss: Whether the company must open a mine.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 9.1 - Prob. 9.1ACQ Ch. 9.1 - Prob. 9.1BCQ Ch. 9.2 - Prob. 9.2ACQ Ch. 9.2 - Why do we say that the payback period is, in a...Ch. 9.3 - Prob. 9.3ACQ Ch. 9.3 - What advantage(s) does the discounted payback have...Ch. 9.4 - What is an average accounting rate of return...Ch. 9.4 - What are the weaknesses of the AAR rule?Ch. 9.5 - Prob. 9.5ACQ Ch. 9.5 - Is it generally true that an advantage of the IRR...

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Chapter 9 Solutions