Old MathJax webview

Mageba Limited has interests in gold mining and it operates in the Northwest Province. Its researchers have just come across new information that new gold deposits have been discovered in the Northern Cape Province. The company is interested in opening a new mine there, as it is projected that the mine will have a useable life span of 5 years. However, its directors are concerned about the general economic outlook of the country and especially the projected inflation figures and how this will affect the project cash flows. The expected average rate of inflation over the period is 6.83%. The firms nominal cost of capital is 14%. Below are the expected project cash flows.