Question
Sunshine Minerals is a diversified mining business and has been offered the opportunity to purchase a copper mine. The company has already spent $22,375 on
Sunshine Minerals is a diversified mining business and has been offered the opportunity to purchase a copper mine.
The company has already spent $22,375 on mining equipment, and will need to spend $43,825 on maintaining existing equipment with or without this project. It will also need to invest an additional $27,428 as working capital for this project. The cost of this copper mining project is $156,603. The project generates a cash flow of $42,584 in the first year which grows at 1.6% annually for 15 years. The required return for a similar copper mining business is 6.7%, and the hurdle rate for Sunshine's entire business is 20%.
What is the NPV of this project? (Round your answer to nearest whole number)
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