QUESTIONS 1. Calculate the payback period, discounted payback period, PI, internal rate of return, and net present value of the proposed mine. Also tell acceptance or rejection of project and why based on each criteria and also tell overall. Question 2 (20) Consider the following two mutually exclusive projects: Cash Flow (A) Year Cash Flow (B) 0 -$300,000 -$40,000 1 20,000 19,000 2 50,000 12,000 3 50,000 18,000 4 390,000 10,500 Whichever project you choose, if any, you require a 15 percent return on your investment. 1. Calculate the payback period, discounted payback period, PI, internal rate of return, and net present value of the projects. Also tell which project you will choose based on each criterion and which project you will choose overall. 2. Make NPV profile chart and find cross-over point. Also explain criteria for accepting and rejecting the project based on discount rate. Page 1 of 1 Assignment 3 Activity Topic & Details: QUESTION 1 (10) Mr A, the owner of Gold Mining, is evaluating a new gold mine in Balochistan. Mr. B, the company's geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. B has taken an estimate of the gold deposits to Mr. C, the company's financial officer. C has been asked to perform an analysis of the new mine and present her recommendation on whether the company should open the new mine. C has used the estimates provided by B to determine the revenues that could be expected from the mine. She has also projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $600 million today, and it will have a cash outflow of $95 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. Mining has a 12 percent required return on all of its gold mines. Year 0 Cash Flow -$600,000,000 75,000,000 1 2 120,000,000 3 160,000,000 4 210,000,000 5 240,000,000 6 160,000,000 7 9 88 130,000,000 90,000,000 -95,000,000