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i need the solution of question 1; 2; 3;4 Mike has just finished the analysis of the gold mine. He has estimated the mine would
i need the solution of question 1; 2; 3;4
Mike has just finished the analysis of the gold mine. He has estimated the mine would be productive for eight years. Jack has taken an estimate of the gold deposits to you, the company's 56 financial officer. You are asked to perform an analysis of the new mine and present the recommendation on whether the company should open the new mine. Suppose the company opens the mine, it will cost $300 million on purchasing the mine, another $150 million on hiring the technicians and management staffs (one-time cost when project begins), and an additional 100 million on purchasing the mining machines and necessary equipment today: You have determined the revenues that could be expected from the mine. In addition to that, it will have a cash outflow of $85 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 as specified below and it has a 10.5 percent required return on all of its gold mines. Year Year Cash flow (in million) specified in the case +150 Cash flow (in million) +150 5 1 6 +125 2 +150 7 +100 3 +175 8 +100 specified in the case 4 +175 9 Use the financial calculator determine the following parameters. 1. Fill in the following table (the information) you need to enter the financial calculator (14 marks) 2. Determine the NPV for this investment project (2 marks) 3. Determine the payback period for this investment project (2 marks) 4. Determine the discounted payback period for this investment project (2 marks) Step by Step Solution
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