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You have a project with the following Annual Cash Flows ($ Million), and your Company Hurdle Rate is 20%. You are producing Copper Concentrates.
You have a project with the following Annual Cash Flows ($ Million), and your Company Hurdle Rate is 20%. You are producing Copper Concentrates. Year: 0 1 2 3 4 5 ($ million): Revenue 0 150 150 150 150 0 Op. Cost 50 50 50 50 30 Cap. Cost 180 20 0 0 0 0 Depreciation 40 40 40 40 40 0 Depletion 18 18 18 18 0 Taxable -180 22 42 42 42 -30 Tax @ 34% 0 7.48 14.28 14.28 14.28 0 +Depreciation 40 40 40 40 0 +Depletion 18 18 18 18 0 Cash Flow -180 72.52 85.72 85.72 85.72 -30 a. (10 pts.) If the cost of fuel causes a ten percent (10%) per year rise in Operating Cost between Years 1 and 5, determine the change in Internal Rate of Return.
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