Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need help finding PV FACTOR OF 12% and PV on excel. thank you Page 168 Bullock Gold Mining Seth Bullock, the owner of Bullock

i need help finding PV FACTOR OF 12% and PV on excel. thank you
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Page 168 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 also has projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $950 million today, and it will have a cash outflow of $75 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 following table. Bullock Mining has a 12 percent required return on all of its gold mines. Year Cash Flow 0 -$950,000,000 1 190,000,000 2 215,000,000 3 225,000,000 4 285,000,000 5 275,000,000 6 235,000,000 7 205,000,000 8 165,000,000 9 75,000,000 1. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, profitability index, and net present value of the proposed mine. 2. Based on your analysis, should the company open the mine? 3. 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, NO 6 JSO A Calibri (Body) 12 v AA Currency no Conditional Formatting Formatos Table Coll Styles ste . V B H llock God Mining Years C D Years Cash Flow Cummulative CF PV factor 12% 0 ($950,000,000) 1 190,000,000 190,000,000 2 215,000,000 405,000,000 3 225,000,000 630,000,000 4 285,000,000 915,000,000 275,000,000 1,190,000,000 6 235,000,000 1.425,000,000 7 205,000,000 1,630,000,000 8 165,000,000 1,795,000,000 9 ($75,000,000) 1,720,000,000 Required Rate 12% Cash Flow PV 0-950,000,000 950,000,000 1 190,000,000 $1.00 2 215,000,000 3 225,000,000 4 285,000,000 5 275,000,000 6 235,000,000 7 205,000,000 8 165,000,000 9 (-75,000,000) UN 4.12 16% + Payback IRR Modified IRR or MIRR Profitability Index NPV 14% $1.15 $139,740,017.61 4+0.134.12 35,000,000/275,000,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Legal Handbook For Financial Planning In 2019

Authors: Allen Buckley

1st Edition

1091578826, 978-1091578821

More Books

Students also viewed these Finance questions

Question

How do books become world of wonder?

Answered: 1 week ago

Question

If ( A^2 - A + I = 0 ), then inverse of matrix ( A ) is?

Answered: 1 week ago

Question

What advice would you provide to Jennifer?

Answered: 1 week ago

Question

What are the issues of concern for each of the affected parties?

Answered: 1 week ago