Chapter 9 MINICASE Bullock Gold Mining Net Present ValLR and Ottu Irwzstrnent Criterie Seth Bullock, the owner of Bullock Gold Mining. is evaluat- ing a new gold mine in South Dakota. Dan Dority. the compa- nys has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years. after which thc gold would completely mined. Dan has taken an estimate of thc gold deposits to Alma Garret'. the company's financial onicer. Alma has been asked by Seth to rurform an analysis of the new mine and present her rec ommcndation on whether the company should open the new Alma has used the estimates provided by Dan to determine the revenues that could be expected from the minc. She has also projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $525 million today, and it Will have a cash outflow Of million nine years from today in costs associated with closing he mine and reclaiming the area surrounding it. The expected 'ash flows each year from the mine are shown in the table. 3uIJock Mining has a required return Of 14 percent on all Of gold mines. Year 6 9 QUESTIONS Cash Flow --3525000.000 74,000.000 97 .ooo,ooo 125,000000 157.000, ooo 125,ooomo 102,000,000 -35,000,000 . 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 Lhe payback veriod. Write a VBA script that calculates the payback period for a project.