Kevin King, the owner of ABC Corporation, is evaluating a new silver mine in South Dakota. Gillian Princess, the company's geologist, has just finished her analysis of the mine site. She has estimated that the mine would be productive for eight years, after which the silver would be completely mined. Gillian has taken an estimate of the silver deposits to Jonathan Knight, the company's financial officer. Jonathan has been asked by Kevin to perform an analysis of the new mine and present his recommendation on whether the company should open the new mine.

Jonathan has used the estimates provided by Gillian to determine the revenues that could be expected from the mine. He has also projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $650 million today, and it will have a cash outflow of $72 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 below. ABC Corporation has a 12 percent required return on all of its silver mines.

Year	Cash Flow
0	-$650,000,000
1	80,000,000
2	121,000,000
3	162,000,000
4	221,000,000
5	210,000,000
6	154,000,000
7	108,000,000
8	86,000,000
9	-72,000,000

Questions

1.Calculate the payback period, modified internal rate of return, and net present value of the proposed mine.

2.Based on your analysis, should the company open the mine?