Question
After discovering a new gold mine in Kabras,Mali Mengi Mining Corporation must decide whether to mine the deposit.The cost effective method of mining gold is
After discovering a new gold mine in Kabras,Mali Mengi Mining Corporation must decide whether to mine the deposit.The cost effective method of mining gold is sulphuric acid extraction ,a process that results in environmental damage.To go ahead with extraction,Mali Mengi must spend ksh. 900000 for new mining equipment and pay ksh. 100000 for its installation .the gold mined will net an estimated ksh. 450 000 each year for 5-year-period .the firms cost of capital is 14%.the project will be depreciated at on straight line method and the appropriate tax rate is 40% .assume the cash flows occur at the end of the year.Evaluate the profits using NPV,IRR,PI and MIRR. Ignore environmental concerns .In case the concerns are included,how will it affect the firm?
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