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In the case of Bethesda mining, the Profitability index for the mining project is calculated to be 1.03. The calculation would be: [$24,328,900/1.12, $22,223,500/1.12^2,
In the case of Bethesda mining, the Profitability index for the mining project is calculated to be 1.03. The calculation would be: [$24,328,900/1.12, $22,223,500/1.12^2, $28,637,500/1.12^3, $65,870,099 /1.12^4] / [$85,000,000+2,915,000] =90,922,502.08 / $87,915,000 =1.03 For initial investment, the cost of new equipment and the investment required for net working capital is included as this reflects current investment capital require. The lost opportunity cost of $7 million is not included in the calculation as this amount does not reference actual capital invested in year one.
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