Question
The USGOLD company has the opportunity to invest in a gold mine. The initial investment is 250 million dollars. Analysts estimate the mine will produce
The USGOLD company has the opportunity to invest in a gold mine. The initial investment is 250 million dollars. Analysts estimate the mine will produce 100,000 ounces of gold per year for the next 10 years. The cost of gold extraction is $150 per ounce and is expected to remain at that level. The current price of gold is $600 per ounce and is expected to increase 4% annually over the next 10 years.
What is the NPV of the project with a 10% discount rate? (Ignore taxes).
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Introduction To Corporate Finance
Authors: Laurence Booth, Sean Cleary
3rd Edition
978-1118300763, 1118300769
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