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Windhoek Mines Ltd. of Namibia is contemplating the purchase of equipment to exploita mineral deposit located on land to which the company has mineral rights.
Windhoek Mines Ltd. of Namibia is contemplating the purchase of equipment to exploita mineral deposit located on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: R 229,000 Cost of new equipment and timbers Working capital required Net annual cash receipts Cost to construct new roads in three years Salvage value of equipment in four years 97,000 112,000 52.000 54,250 "Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. (The currency in Namibia is the rand, here denoted by R.) It is estimated that the mineral deposit would be exhausted after four years of mining, At that point, the working capital would be released for reinvestment elsewhere. The company's discount rate is 22%
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