Golden Resources Inc. is predicting the following cash inflows for a proposed new project under three different

Question:

Golden Resources Inc. is predicting the following cash inflows for a proposed new project under three different growth scenarios:

Required:
(a) Calculate the present value of the cash inflows for each growth scenario, assuming that the appropriate discount rate for Golden Resources is 10%.
(b) Assuming the initial investment at the beginning of Year 1 is $1.28 billion (that is, $1,280 million), calculate the net present value for each growth scenario.
(c) Based on your answer in part (b), would you recommend that Golden Resources implement the proposed new project, if it determines that all three scenarios are equally likely?

Net Present Value
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