Due to an increase in copper prices to MNT 7,744 per pound (MNT stands for Tughrik, the official currency of Mongolia), Tian Poh Resources, a Singapore-based company with coal and copper assets in Mongolia, is thinking about reopening an old copper mine in the Oyu Tolgoi deposits, which was closed due to low copper prices. Reopening the mine would require an up-front capital expenditure of MNT 250 million and annual operating expenses of MNT 65 million. Tian Poh expects that over a 10-year operating life it can recover 100,000 pounds of copper from the mine and that the project will have no terminal value. The company uses straight-line depreciation, has a 25% corporate tax rate, and has a 13.8% cost of capital.

a. Calculate the operating cash flows for the copper mine project.

b. Depict on a timeline the project cash flows for the copper mine project.

c. Calculate the internal rate of return (IRR) for the copper mine project.

d. Calculate the net present value (NPV) for the copper mine project.

e. Make a recommendation to accept or reject the copper mine project, and justify your answer.