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Ayx is considering opening a new mine. The first option is a top of the line high efficiency mine with a cost of $20 million.

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Ayx is considering opening a new mine. The first option is a top of the line high efficiency mine with a cost of $20 million. This mine will generate cash flows of $7 million per year for the next six years. At the end of the sixth year. Ayx will have to reclaim the land around the new mine at a cost of $14milion. The second option is an economy mine that will generate $4million in cash flows for the next six years, but require no land reclamation. This mine costs $15 million, If Ayx estimates its cost of capital to be 11:2%, which project should it accept? Why? Accept high eificiency mill, NPV $2.04 mil vs $1.83mil Accept economy mili; NIPV $9.00 mil vs, $.4.56 mil Aecept economy mill, Nisv $9000 mil ive $800 mil

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