Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A company has a copper mine which is expected to be mined indefinitely. The current copper price is 100 yuan / ton, the annual output
A company has a copper mine which is expected to be mined indefinitely. The current copper price is 100 yuan / ton, the annual output is 20000 tons, and the annual operating cost is 3 million yuan. Suppose that in the next two years, the copper price will rise or fall by 20% each year(the probability is 50% equally), and then it will remain at that level. Set the cost of capital at 12%.
1. Calculate the net present value of the continued operation of copper mines
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started