decisions for npv. irr, payback and discounted payback are yes or no with explanations

Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the companys 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 companys 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 company opens the mine, it will cost $850 million today, and it will have a cash outflow of $120 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. Bullock Mining has a required return of 12 percent on all of its gold mines.

Year Cash Flow 0 1 2 3 4 5 6 7 8 9 $850,000,000 165,000,000 190,000,000 225,000,000 245,000,000 235,000,000 195,000,000 175,000,000 155,000,000 120,000,000

Construct a spreadsheet to calculate the net present value, onternal rate of return, the payback period and discounted payback period.

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

A Case Study Protected View Da New View HOT Layout (0) FTCTDVEW Bentel concientes pared to F7 H - F 2 CES Rased on you analysis, should 4 0 1 2 3 4 3 1 12 11 12 13 14 16 11 13 R od 23 as 2 CS We bere nearth o TO -Autosave Review View Data Formulas Page Layout Insert File Home PROTECTED VIEW Be careful - files from the internet can contain viruses. Unless you need to v G4 H DIE A . 1 2 3 You are unable to readplase look at page 229 of your BOOK 6 LLOCK GOLD MINING www dock Gold Mining a new poidmine South Dakota Den Dorty og hest frihed his ways of the reste. He has the repe years the which the gold would be completely mined. Dan has en este Ganet, the company's financial Office Alma has been asked by Seth to perform the wine and present her recommendation on where the company should open the TI 12 1 14 de estimates provided by Dan to determine the venues that could be expected from the She also projected the sense of opening the sine and the annual per este er the mine. I will cost $850 milion today and will have a cash outflow of $120 million from today in costs icoted dosing the mine and receiving the area surrounding ce cash flows each year from the nine are shown in the table that follows. Buleck has a que remonto is gold me 15 YEAR CASH FLOW 19 20 -- SODO0.000 165.000.000 190.000.000 225.000.000 245.000.000 225.000.000 195.000.000 175.000.000 155.000.000 120.000.000 7 34 A. Based on the above, construct a spreadsheet to calculate the Net Present Value, internal rate of return, the payback period and the disocunted payback period * Assume a cut off of 5 years for the payback and disocunted payback period). B. Based on your analysis, should the company open the mine? Case study Template Sheets 37 Type here to search o