*23. You are considering investing in a new gold mine in South Africa. Gold in South Africa...
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*23. You are considering investing in a new gold mine in South Africa. Gold in South Africa is buried very deep, so the mine will require an initial investment of $250 million. Once this investment is made, the mine is expected to produce revenues of $30 million per year for the next 20 years. It will cost $10 million per year to operate the mine.
After 20 years, the gold will be depleted. The mine must then be stabilized on an ongoing basis, which will cost $5 million per year in perpetuity. Calculate the IRR of this investment. (Hint: Plot the NPV as a function of the discount rate.)
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Related Book For
Fundamentals Of Corporate Finance
ISBN: 9781292018409
3rd Global Edition
Authors: Berk, Peter DeMarzo, Jarrad Harford
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