Case Solution - Topic 6 (Capital Budgeting Techniques)

Case Solution - Topic 6 (Capital Budgeting Techniques) -...

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CHAPTER 8 BULLOCK GOLD MINING 1. An example spreadsheet is:
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CHAPTER 8 C-2 Note, there is no Excel function to directly calculate the payback period. We used “If” statements in our spreadsheet. The IF statement we used is: =IF(-D8>(D9+D10+D11+D12+D13+D14),"Greater than 6 years",IF(- D>(D9+D10+D11+D12+D13),(5+(-D8-D9-D10-D11-D12-D13)/D14),IF(- D8>(D9+D10+D11+D12),(4+(-D8-D9-D10-D11-D12)/D13),IF(-D8>(D9+D10+D11),(3+(-
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Unformatted text preview: D8-D9-D10-D11)/D12),IF(-D8>(D9+D10),(2+(-D8-D9-D10)/D11),IF(-D8>D9,(1+(-D8-D9)/D10),IF(-D8<D9,-D8/D9," "))))))) 2. Since the NPV of the mine is positive, the company should open the mine. We should note, it may be advantageous to delay the mine opening because of real options, a topic covered in more detail in a later chapter....
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Case Solution - Topic 6 (Capital Budgeting Techniques) -...

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