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5. A mining company is deciding whether to open a strip mine, which costs $2 million. Cash inflows of $13 million would occur at the
5. A mining company is deciding whether to open a strip mine, which costs $2 million. Cash inflows of $13 million would occur at the end of year 1. The land must be return to its natural state at a cost of $12 million, payable at the end of year 2. Should the project be accepted if WACC = 10%? If WACC = 20%? Explain your reasoning.
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