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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. |
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