Question
unshine Minerals is a diversified mining business and has been offered the opportunity to purchase a copper mine for $104, 087. The company has already
unshine Minerals is a diversified mining business and has been offered the opportunity to purchase a copper mine for $104, 087.
The company has already spent $36,478 on mining equipment and will need to spend $28,280 on maintaining existing equipment with or without this project. It will also need to invest an additional $36,054 as working capital for this project which will be recovered at the end of the project. The project generates an after-tax cash flow of $28,764 in the first year, which grows at 3.1% annually for 15 years after which the mine will be abandoned. The required return for a similar copper mining business is 9.3%.
What is the NPV of this project?
Question 15 options:
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| a) | $129,576 |
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| b) | $140,080 |
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| c) | $140,141 |
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| d) | $87,255 |
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| e) | None of the listed answers |
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