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M Sun Apr 9 . . . AA ezto.mheducation.com C CHEM300A group 10 goo.. SurveyMonkey Dashboard ENT402 - TEAM 8 Survey x M Question 3
M Sun Apr 9 . . . AA ezto.mheducation.com C CHEM300A group 10 goo.. SurveyMonkey Dashboard ENT402 - TEAM 8 Survey x M Question 3 - Connect Ass... G Handout 6 - SOLUTION -... Activity Connect Assignment #5 i Saved Help Save & Exit Subm 3 Windhoek Mines, Lid., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: $275, 000 10 Cost of new equipment required and timbers points Working capital required $100, 000 Annual net cash inflows* $120, 00 Cost to construct new roads in three years $ 40, 000 Salvage value of equipment in four years $ 65, 000 Print Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, etc. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 20%. Required: a. Determine the net present value of the proposed mining project. (Hint: Use Microsoft Excel to calculate the discount factor(s).) (Any cash outflows should be indicated by a minus sign. Do not round your intermediate calculations.) Item Year(s) Amount of Present Value of Cash Flows Cash Flows Cost of equipment required Now Working capital required Now Net annual cash receipts 1-4 Cost of road construction A W Salvage value of equipment Working capital released Net present value . Should the project be accepted? MMC Hill In Apr 9 . . . AA ezto.mheducation.com C 00A group 10 goo... SurveyMonkey Dashboard ENT402 - TEAM 8 Survey x M Question 3 - Connect Ass... G Handout 6 - SOLUTION -... Connect Assignment #5 i Saved Help Save & Exit Cost of new equipment required and timbers $275, 000 Working capital required $100, 000 3 Annual net cash inflows* $120, 000 Cost to construct new roads in three years $ 40, 000 Salvage value of equipment in four years $ 65, 000 10 *Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, etc. points The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 20%. Required: Print a. Determine the net present value of the proposed mining project. (Hint: Use Microsoft Excel to calculate the discount factor(s).) (Any cash outflows should be indicated by a minus sign. Do not round your intermediate calculations.) Item Year(S) Amount of Present Value of Cash Flows Cash Flows Cost of equipment required Now Working capital required Now Net annual cash receipts 1-4 Cost of road construction 3 Salvage value of equipment 4 Working capital released Net present value b. Should the project be accepted? Yes ONo Mc Graw Hill @ # % & 2
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