You are an activist shareholder that wants to change the management team of a mining company. The company has no debt and therefore faces no risk of default. As an activist shareholder, your main concern is that the company is being poorly managed by the current CEO.

The company announced plans to extract and sell 9 tons of gold each year for the next five years. The company plans to sell the mined gold for an uncertain per-ton market price of either $20M USD (50 percent probability) or $60 M USD (50 percent probability). Assume that the cost of extracting each ton of gold is $30M for all years, and that the discount rate for gold mining operations is 3 percent.

c) What is the market value of the gold mining operations? Calculate the value of operations as the present value of expected revenues minus the present value of future costs.

d) If there are 10M shares outstanding, what is the current share price of the firm?