Question 4 (40 points): Calculate the After-Tax Cash Flow, IRR, and NPV (at minimum ROR = 15%, after tax) for the following investment with 6-year project life time and a Corporate Tax Rate of 21%: The investor is a large C-Corp. Total reserve is 3,000,000 UNIT. Production will be 500,000 UNIT per year from year 1 to year 6 Mineral rights acquisition cost for property would be $4,500,000 at time zero Exploration cost is expected to be $14,000,000 at time zero Tangible equipment cost is $5,000,000 at time zero Working capital of $1,000,000 also at time zero Equipment depreciation will be based on MACRS 5-years life depreciation starting from year 1 to year 6 (consider rates from table A-1 for 5-years with half-year convention) The price of commodity is $55 per UNIT which has 5% escalation each year starting from year 0 Operating cost is $2,500,000 annually with an escalation rate of 5% starting from year 0 Environmental OPEX (Year 6), $2,000,000 escalated 5% starting from year 0 Royalty is 1/8 For depletion cost calculations, amortize the mineral rights acquisition cost equally over 6 years. Table A-1. 3-, 5-, 7-, 10-, 15-, and 20-Year Property Half-Year Convention Depreciation rate for recovery period Year 3-year 5-year 7-year 10-year 15-year 20-year 33.33% 44.45 14.81 7.41 20.00% 32.00 19.20 11.52 11.52 14.29% 24.49 17.49 12.49 8.93 10.00% 18.00 14.40 11.52 9.22 5.00% 9.50 8.55 7.70 6.93 3.750% 7.219 6.677 6.177 5.713 oovo na Wn- 5.76 5.285 8.92 8.93 4.46 7.37 6.55 6.55 6.56 6.55 6.23 5.90 5.90 5.91 5.90 4.888 4.522 4.462 4.461 3.28 5.91 5.90 5.91 5.90 5.91 4.462 4.461 4.462 4.461 4.462 Bo to the wonde 2.95 4.461 4.462 4.461 4.462 4.461 2.231