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Use the attached case and find the total cash flows from year 0 to year 6. (Note: Answers must be in 000's) As the newly
Use the attached case and find the total cash flows from year 0 to year 6. (Note: Answers must be in 000's)
As the newly appointed financial manager of Blooper Industries, you are about to analyze a proposal for mining and selling a small deposit of high grade copper ore. You are given the following information to advise whether to go ahead with the investments or not. Capital investment $10 million in mining machinery. At the end of 5 years the ore deposit is exhausted. We assume the mining equipment can be sold for $2 million in year 6. The required rate of return for the project is 12% and the corporate tax rate is 35 percent. The company applies straight line depreciation to the mining equipment over 5 years. Working capital requirements (000) Year 0 1 2 3 4 5 Amount ($) | 1.500 4.075 4.279 4.493 4,717 3.039 Expected revenue (000) Year 0 1 2 3 4 5 6 Amount ($) 15,000 15,750 16,538 17,364 18,233 Projected expenses (000) Year Amount ($) 10,000 10.500 11,025 11,576 12.155 0 0 1 2 3 4 5 6Step by Step Solution
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