You own a coal mining company and are considering opening a new mine. The mine itself will cost $$116\mathrm{.}8$ million to open. If this money is spent immediately, the mine will generate $$19\mathrm{.}8$

million for the next $10$ years. After that, the coal will run out and the site must be cleaned and maintained at environmental standards. The cleaning and maintenance are expected to cost

$$1\mathrm{.}8$ million per year in perpetuity. What does the IRR rule say about whether you should accept this opportunity? If the cost of capital is $7\mathrm{.}6\%,$ what does the NPV rule say?

What does the IRR rule say about whether you should accept this opportunity? $($Select the best choice below.$)$

A$.$ Reject the opportunity because the IRR is lower than the $7\mathrm{.}6\%$ cost of capital.

B$.$ Accept the opportunity because the IRR is greater than the cost of capital.

C$.$ The IRR is $r=9\mathrm{.}47\%,$ so accept the opportunity.

D$.$ There are two IRRs, so you cannot use the IRR as a criterion for accepting the opportunity.

The NPV using the cost of capital of $7\mathrm{.}6\%$ is $ million. $($Round to three decimal places.$)$

The plot of the NPV as a function of the discount rate is $n$ shaped. It intersects the $x-$axis at $r=2\mathrm{.}49\%$ and $r=9\mathrm{.}47\%$ What does the NPV rule say? $($Select the best choice below.$)$

A$.$ If the opportunity cost of capital is between $r=2\mathrm{.}49\%$ and $r=9\mathrm{.}47\%,$ the investment should be undertaken.

B$.$ Reject the project because the NPV is negative.

C$.$ If the opportunity cost of capital is less than $r=2\mathrm{.}49\%,$ the investment should be undertaken.

D$.$ If the opportunity cost of capital is greater than $r=9\mathrm{.}47\%,$ the investment should be undertaken.