Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To determine the change in Internal Rate of Return IRR due to a 10 per year rise in Operating Cost b... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Operations Management Managing Global Supply Chains

Authors: Ray R. Venkataraman, Jeffrey K. Pinto

1st edition

1506302935, 1506302939, 978-1506302935

More Books

Students also viewed these Finance questions

Question

y = 4 . 2 + 1 . 2 x

Answered: 1 week ago

Question

Managing and Orchestrating the Meeting.

Answered: 1 week ago

Question

=+4. Which of the following are true? If false, explain briefly.

Answered: 1 week ago