Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Investment Analysis Measures Bullock Gold Mining Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2020). Essentials of Corporate Finance (10th ed.), pg. 274.

Investment Analysis Measures
Bullock Gold Mining
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2020). Essentials of Corporate Finance (10th ed.), pg. 274. McGraw Hill LLC.
Input area:
Year Cash flow
0 $ (625,000,000) <--Listed negative because its an outflow of cash
1 $ 70,000,000
2 $ 129,000,000
3 $ 183,000,000
4 $ 235,000,000
5 $ 210,000,000
6 $ 164,000,000
7 $ 108,000,000
8 $ 86,000,000
9 $ (90,000,000) <---Listed as negative because investment lost revenue
Required return 12%
Payback Period Input area:
Year Cash Flow Balance remaining
0 $ (625,000,000)
1 $ 70,000,000
2 $ 129,000,000
3 $ 183,000,000
4 $ 235,000,000
5 $ 210,000,000
6 $ 164,000,000
7 $ 108,000,000
8 $ 86,000,000
9 $ (90,000,000)
Output area:
Payback period <--Complete Payback Input Chart and enter answer here
IRR <--Use IRR fx for credit consideration.
PV of future cash flows <--Use NPV fx for credit consideration.
Profitability index PI = PV of future cash flows (CF1-infinite)/Initial Investment Cost
Hint: Remember to only use Cash Flows 1-9 in NPV fx
NPV of Project NPV of project = PV of future cash flows (CF1-infinite) - Initial Investment Costs
Based upon your calculations from the previous question, explain in detail (complete sentences) whether or not Bullock Gold Mining company should open the mine, and why.
Reference:
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2020). Essentials of Corporate Finance (10th ed.), pg. 274. McGraw Hill LLC.

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

More Books

Students also viewed these Finance questions