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Posted on Jul 13, 2024

A mining company is deciding whether to open a strip mine, which costs $1.5 million. Cash inflows of $14 million would occur at the end

A mining company is deciding whether to open a strip mine, which costs $1.5 million. Cash inflows of $14 million would occur at the end of Year 1. The and must be returned to its natural state at a cost of $12.5 million, payable at the end of Year 2 a. Plot the project's NPV profile B WOL muros 900 300 400 WACC) 200 300 400 WACEN ON 200 300 400 WACCON 300 400 WACC) The correct sketch is set Click here to read the eBook: Net Present Value (NPV) Click here to read the book Internal Rate of Return (RA) NPV AND IRR A store has 5 years remaining on its lease in a mailRart is $2,000 per month, 60 payments romain, and the next payment is due in 1 month. The mais owner plans to sell the property in a year and wants rent at that time to be high so that the property will appear more valuable. Therefore, the store has been offered a great deal owner's words) on a new year lease. The new lease calls for no rent for 9 months, then payments of $2,750 per month for the next 51 months. The lease cannot be broken, and the store's WACC is 12% (or 15 per month). 3. Should the new lease be accepted? (Hint: Be sure to use 15 per month.) b. If the store owner decided to bargain with the main owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and oldes? Find PV of the old cases orginal contact - 9; then treat this as the of a 51-period annuity whose payments representerenturing months 10 to 60.) Round your answer to the nearest cent. Do not round your intermediate calculations c. The store one is not sure of the 12% WACC-Could be higher or lower. At what nominal WACC would the store owner be indifferent between the toest: Calculate the differences between the two payment streams, then finds RR.) Round your answer to two decimal places. Do not Found your intermediate calculations Search this cou End-of-Chapter Problems - The Basics of Capital Budgeting b. Should the project be accepted WACC - 10% Should the project be accepted WACC - 2012 -Select- c. Think of some other capital budgeting situations in which negative cash rows during or at the end of the project's life might load to multiple TRRS. The input in the box below will not be graded, but may be reviewed and considered by your instructor d. What is the project's MIRR - WACC - 10%? Round your answer to two decimal places. Do not round your intermediate calcio What is the project's MIRR & WACC -20% Round your answer to two decimal places. Do not round your intermediate calculation Does MIRR lead to the same accept reject decision for this project as the NPV method Does the MIRR method always lead to the same accept reject decision as NPV? (Hint: Consider my dutive projects that differ in size) A mining company is deciding whether to open a strip mine, which costs $1.5 million. Cash inflows of $14 million would occur at the end of Year 1. The and must be returned to its natural state at a cost of $12.5 million, payable at the end of Year 2 a. Plot the project's NPV profile B WOL muros 900 300 400 WACC) 200 300 400 WACEN ON 200 300 400 WACCON 300 400 WACC) The correct sketch is set Click here to read the eBook: Net Present Value (NPV) Click here to read the book Internal Rate of Return (RA) NPV AND IRR A store has 5 years remaining on its lease in a mailRart is $2,000 per month, 60 payments romain, and the next payment is due in 1 month. The mais owner plans to sell the property in a year and wants rent at that time to be high so that the property will appear more valuable. Therefore, the store has been offered a great deal owner's words) on a new year lease. The new lease calls for no rent for 9 months, then payments of $2,750 per month for the next 51 months. The lease cannot be broken, and the store's WACC is 12% (or 15 per month). 3. Should the new lease be accepted? (Hint: Be sure to use 15 per month.) b. If the store owner decided to bargain with the main owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and oldes? Find PV of the old cases orginal contact - 9; then treat this as the of a 51-period annuity whose payments representerenturing months 10 to 60.) Round your answer to the nearest cent. Do not round your intermediate calculations c. The store one is not sure of the 12% WACC-Could be higher or lower. At what nominal WACC would the store owner be indifferent between the toest: Calculate the differences between the two payment streams, then finds RR.) Round your answer to two decimal places. Do not Found your intermediate calculations Search this cou End-of-Chapter Problems - The Basics of Capital Budgeting b. Should the project be accepted WACC - 10% Should the project be accepted WACC - 2012 -Select- c. Think of some other capital budgeting situations in which negative cash rows during or at the end of the project's life might load to multiple TRRS. The input in the box below will not be graded, but may be reviewed and considered by your instructor d. What is the project's MIRR - WACC - 10%? Round your answer to two decimal places. Do not round your intermediate calcio What is the project's MIRR & WACC -20% Round your answer to two decimal places. Do not round your intermediate calculation Does MIRR lead to the same accept reject decision for this project as the NPV method Does the MIRR method always lead to the same accept reject decision as NPV? (Hint: Consider my dutive projects that differ in size)