BULLOCK GOLD MINING

Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority,

the company's geologist, has just finished his analysis of the mine site. He has estimated that the mine

would be productive for eight years, after which the gold would be completely mined. Dan has taken an

estimate of the gold deposits to Alma Garrett, the company's financial officer. Alma has been asked by

Seth to perform an analysis of the new mine and present her recommendation on whether the company

should open the new mine.

Alma has used the estimates provided by Dan to determine the revenues that could be expected from the

mine. She has also projected the expense of opening the mine and the annual operating expenses. If the com$-$

pany opens the mine, it will cost $$750$ million today, and it will have a cash outflow of $$105$ million nine years

from today in costs associated with closing the mine and reclaiming the area surrounding it$.$ The expected cash

flows each year from the mine are shown in the table that follows. Bullock has a $12$ percent required return on

all of its gold mines.

Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of

return, and net present value of the proposed mine.

Based on your analysis, should the company open the mine?

Bonus question: Most spreadsheets do not have a built$-$in formula to calculate the payback period. Write

a VBA script that calculates the payback period for a project. please explain this clearly!