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Lesson #5, Assignment #2

# Lesson #5, Assignment #2 - 1.15 =NPV(D19,D9:D17-D8 NPV...

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Chapter 9 Bullock Gold Mining Input area: Year Cash flow 0 \$(600,000,000) 1 \$75,000,000 2 \$120,000,000 3 \$160,000,000 4 \$210,000,000 5 \$240,000,000 6 \$160,000,000 7 \$130,000,000 8 \$90,000,000 9 \$(95,000,000) Required return 12% Output area: Question 1: Payback period 4.15 IRR 16.04% =IRR(D8:D17) IRR Err:523 =IRR(D8:D17,-0.99) MIRR 13.63% =MIRR(D8:D17,D19,D19) Profitability index
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Unformatted text preview: 1.15 =NPV(D19,D9:D17)/-D8 NPV \$88,111,548.04 =NPV(D19,D9:D17)+D8 Question 2: Based on your analysis, should the company open the mine? Since the NPV of the mine is positive, the company should open the mine. It may be advantageous to delay the mine opening because of real options....
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