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You are the CEO of gold mining company and are deciding whether to open a new mine. Feasibility studies have shown that it will cost
You are the CEO of gold mining company and are deciding whether to open a new mine. Feasibility studies have shown that it will cost $100 million to open the mine. If this money is spent immediately, the mine will generate $15 million for the next 10 years. After that, the gold will run out and the site must be cleaned, maintained and remediated. The remediation process is expected to cost $2 million per year in perpetuity. If the discount rate is 10% should you decide to go ahead and open the mine?
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