BHP is considering buying in a new iron ore mine which is forecasted to start earning $5,000,000 of revenue in the second year of operation. Revenue is projected to increase at 10% p.a., operating costs are 25% of annual revenue and the mine is kept for 3 years of revenue, after which it is expected to be sold for $5mil.

Setting up the mine requires $2mil today and $4mil in the first year. 60% of BHPs capital is financed through debt which has a cost of 8% and shareholders expect a 14% return on their equity. Does the new iron ore mine add to shareholders wealth? Use NPV and IRR to justify your answer.