A mining firm has the opportunity to purchase a license on a plot of land to mine

Question:

A mining firm has the opportunity to purchase a license on a plot of land to mine for gold. Consider the following financial information:
• The investment cost to mine is $40M.
• It costs $320 per ounce to mine gold.
• The spot price of gold is $340 per ounce.
• The licensing agreement provides exclusive rights for three years.
• The historical volatility of gold prices is 20%.
• The estimated gold reserve on the plot of land is 1.5M ounces.
• The firm's is 12% and r = 6%.
Determine the maximum amount the firm should pay for a license to mine for gold on the property in question, or equivalently, what is the value of the gold mine today? MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...