Please answer using notes for solution in work. show formulas if possible as to follow along.

Bethesda Mining is a mild coal mining company with 20 mites located in China, Ivania West Virginia, und Kentucky. The company operate de mines as well as strip mines. Most of the coal mined twild under contract with excess production sold on the spot market The coal miting industry, especially high-sulfur coil operation och Betesda has been hard-hit by ironmental regulations. Recently, however, a combination of increased demand for coal de politica rotation technologies has led to improved market demand for high-sulfur coal. Bethesda han just boom approached by Mid-Chie Electric Company with a request to supply coal for its doctric generators for the next four years. Bashda Mining does not have enough excess capacity its existing minestone the contract. The company is considering opening trip mine 5.000 land that costs $5 million Strip mining in a process where the layers of topsoil above a coal veins are removed, and the experied coal is removed Some time ago, the company would simply remove the coal and leave the land in an unusable condition. Changes in mining regulations now force a company to reclaim the land that is, when the mining is completed the land must be restored to hear is igital condition. The land can then be used for other propers see paragraph the below for further information regarding the land reclamation) Because it is currently operating a full capacity, Bethesda will need to parte dal meccsyquipment, which will 564 milion. The equipment will be depreciated on a four-year straigh-line schedule. The contract rms for only four years. At that time, the call from the site will be entirely mined. The company feels that the equipment will be worthless at the end of the contracte, a market salvage value of neto). The contract calls for the delivery of 500,000 tons of coal per year at a price of 580 person Bethesda Mining feel that coal production will be 600 000 700.000, 800,000 to, and 500.000 tons, respectively, over the next four years. The excess production will be sold in the spot market an average of 570 perto Variable costs amon to $30 per ton and find costs $4.000.000 per year. The mine will require a networking capital (NW) of percent of sales. The NWC will be built up in the your prior to the sales te of all your sales Betheid will be responsible for reclaiming the land at the termination of the mining. This will occur in Your 5.The company uses an outside company for the reclamation of all the company's strip mine. It is estimated the cost of reclamation will be $2.5 million. Bethesda faces2 percent tax rate and has a 125 percent required return on sew strip mine projects. Assume that a les in any you will result in a tax credit You have been approached by the president of the company with a request to analyze the project. Calculate the ne prosent value and internal rate of return for the new strip mine. Should Bethuda Mining take the contract and open the mine! Notes for solution 1 Lantas Assume that the land but no value at the end of the projet. Also, land cannot be depreciated based on FRS to 2 Desemination in This is relevant although the production ends at the end of year 4. Remember to take into account years reclamation con algh there are no les or other expenses in your S). Asume that the firm is profitable and can use this expense to reduce the tax payment 1 Networking capital calculates Networking capital is 5% of next year's sales. That means that in year 4. NWC is clerod since there are zero les in your 4. Pulletin & Sales 20 points Costs 30 pts Cash flow adjustments 10 points NPV and IRRO pts The coal mining industry, especially high-salfur coal operations such as Bethesda, has been hard-hit by environmental regulations. Recently, however, a combination of increased demand forces and new pollution reduction technologies has led to improved market demand for high-sulfur coal Bethesda has just been approached by Mid-Ohio Electric Company with a request to supply coal for its electric generators for the next four years. Bethesda Mining does huve cough excess capacity at its existing mines to guarantee the contract. The company is considering opening a strip mine in Ohio on 5,000 acres of land that costs $5 million Strip mining is a process where the layers of topsoil above a coal vein are removed, and the exposed coal is removed. Some time ago, the company would simply remove the coal and leave the land in an unusable condition. Changes in mining regulations now force a company to reclaim the land that is when the mining is completed, the land must be restored to near its original condition. The land can then be used for other purposes see paragraph the below for further information regarding the land reclamation) Because it is currently operating at full capacity, Bethesda will need to purchase additional necessary equipment which will cost $64 million. The quipment will be depreciated on a four-year straight-line schedule. The contract Tunts for only four years. At that time, the cool from the site will be entirely mined. The company feels that the equipment will be worthless at the end of the contract de musket salvage value oferol The contract calls for the delivery of 500,000 tons of coal per year at a price of 580 parton Bethesda Mining feels that coal production will be 600,000 tons, 700.000 tons, 800,000 tons, and 500,000 tons, respectively, over the next four years. The excess production will be sold in the spot market at an average of S70 per ton. Variable costs amount to $30 perton, and fixed costs are $4,000,000 per year. The mine will require a networking capital (NWC) investment of percent of sales. The NWC will be built up in the year prior to the sales tie of next year sale) Bethesda will be responsible for reclaiming the land at the termination of the mining. This will occur in Year 5. The company uses an outside company for the reclamation of all the company's strip mises. It is estimated the cost of reclamation will be $2.5 million Bethesda faces a 28 percent tax rate and has a 125 percent required return ce new strip mine projects. Assume that a los in any year will result in a tax credit. You have been approached by the president of the company with a request to analyse the project, Calculate the net present value and internal rate of return for the new trip mine. Should Bethesda Mining take the contract and open the mine! Notes for solution: 1. Lanchas Assume that the land has no value at the end of the project. Also, land cannot be depreciated based on 18.5 rules. So do not assign depreciation to the lani. 2. Pred temination in wat This is relevant although the production ends at the end of year 4. Remember to take into account yours reclamation cost (although there are no sales of other expenses in year 5). Assume that the firm is profitable and can use this expense to roluce the tax payment 3. Networking capitalakulatie Net working capital is 5% of next year's sales Thar tneans that in year 4, NWC is closed since there are memo sales in years Sales 20 points Costs 30 points C Cash flow adjustments 30 points NPV and IRR 20 Bethesda Mining is a mild coal mining company with 20 mites located in China, Ivania West Virginia, und Kentucky. The company operate de mines as well as strip mines. Most of the coal mined twild under contract with excess production sold on the spot market The coal miting industry, especially high-sulfur coil operation och Betesda has been hard-hit by ironmental regulations. Recently, however, a combination of increased demand for coal de politica rotation technologies has led to improved market demand for high-sulfur coal. Bethesda han just boom approached by Mid-Chie Electric Company with a request to supply coal for its doctric generators for the next four years. Bashda Mining does not have enough excess capacity its existing minestone the contract. The company is considering opening trip mine 5.000 land that costs $5 million Strip mining in a process where the layers of topsoil above a coal veins are removed, and the experied coal is removed Some time ago, the company would simply remove the coal and leave the land in an unusable condition. Changes in mining regulations now force a company to reclaim the land that is, when the mining is completed the land must be restored to hear is igital condition. The land can then be used for other propers see paragraph the below for further information regarding the land reclamation) Because it is currently operating a full capacity, Bethesda will need to parte dal meccsyquipment, which will 564 milion. The equipment will be depreciated on a four-year straigh-line schedule. The contract rms for only four years. At that time, the call from the site will be entirely mined. The company feels that the equipment will be worthless at the end of the contracte, a market salvage value of neto). The contract calls for the delivery of 500,000 tons of coal per year at a price of 580 person Bethesda Mining feel that coal production will be 600 000 700.000, 800,000 to, and 500.000 tons, respectively, over the next four years. The excess production will be sold in the spot market an average of 570 perto Variable costs amon to $30 per ton and find costs $4.000.000 per year. The mine will require a networking capital (NW) of percent of sales. The NWC will be built up in the your prior to the sales te of all your sales Betheid will be responsible for reclaiming the land at the termination of the mining. This will occur in Your 5.The company uses an outside company for the reclamation of all the company's strip mine. It is estimated the cost of reclamation will be $2.5 million. Bethesda faces2 percent tax rate and has a 125 percent required return on sew strip mine projects. Assume that a les in any you will result in a tax credit You have been approached by the president of the company with a request to analyze the project. Calculate the ne prosent value and internal rate of return for the new strip mine. Should Bethuda Mining take the contract and open the mine! Notes for solution 1 Lantas Assume that the land but no value at the end of the projet. Also, land cannot be depreciated based on FRS to 2 Desemination in This is relevant although the production ends at the end of year 4. Remember to take into account years reclamation con algh there are no les or other expenses in your S). Asume that the firm is profitable and can use this expense to reduce the tax payment 1 Networking capital calculates Networking capital is 5% of next year's sales. That means that in year 4. NWC is clerod since there are zero les in your 4. Pulletin & Sales 20 points Costs 30 pts Cash flow adjustments 10 points NPV and IRRO pts The coal mining industry, especially high-salfur coal operations such as Bethesda, has been hard-hit by environmental regulations. Recently, however, a combination of increased demand forces and new pollution reduction technologies has led to improved market demand for high-sulfur coal Bethesda has just been approached by Mid-Ohio Electric Company with a request to supply coal for its electric generators for the next four years. Bethesda Mining does huve cough excess capacity at its existing mines to guarantee the contract. The company is considering opening a strip mine in Ohio on 5,000 acres of land that costs $5 million Strip mining is a process where the layers of topsoil above a coal vein are removed, and the exposed coal is removed. Some time ago, the company would simply remove the coal and leave the land in an unusable condition. Changes in mining regulations now force a company to reclaim the land that is when the mining is completed, the land must be restored to near its original condition. The land can then be used for other purposes see paragraph the below for further information regarding the land reclamation) Because it is currently operating at full capacity, Bethesda will need to purchase additional necessary equipment which will cost $64 million. The quipment will be depreciated on a four-year straight-line schedule. The contract Tunts for only four years. At that time, the cool from the site will be entirely mined. The company feels that the equipment will be worthless at the end of the contract de musket salvage value oferol The contract calls for the delivery of 500,000 tons of coal per year at a price of 580 parton Bethesda Mining feels that coal production will be 600,000 tons, 700.000 tons, 800,000 tons, and 500,000 tons, respectively, over the next four years. The excess production will be sold in the spot market at an average of S70 per ton. Variable costs amount to $30 perton, and fixed costs are $4,000,000 per year. The mine will require a networking capital (NWC) investment of percent of sales. The NWC will be built up in the year prior to the sales tie of next year sale) Bethesda will be responsible for reclaiming the land at the termination of the mining. This will occur in Year 5. The company uses an outside company for the reclamation of all the company's strip mises. It is estimated the cost of reclamation will be $2.5 million Bethesda faces a 28 percent tax rate and has a 125 percent required return ce new strip mine projects. Assume that a los in any year will result in a tax credit. You have been approached by the president of the company with a request to analyse the project, Calculate the net present value and internal rate of return for the new trip mine. Should Bethesda Mining take the contract and open the mine! Notes for solution: 1. Lanchas Assume that the land has no value at the end of the project. Also, land cannot be depreciated based on 18.5 rules. So do not assign depreciation to the lani. 2. Pred temination in wat This is relevant although the production ends at the end of year 4. Remember to take into account yours reclamation cost (although there are no sales of other expenses in year 5). Assume that the firm is profitable and can use this expense to roluce the tax payment 3. Networking capitalakulatie Net working capital is 5% of next year's sales Thar tneans that in year 4, NWC is closed since there are memo sales in years Sales 20 points Costs 30 points C Cash flow adjustments 30 points NPV and IRR 20