Business, 05.05.2020 02:46 hanz73

$1,621,000 and will produce $307,000 per year in years 5 through 15 and $570,000 per year in years 16 through 25. The U. S. gold mine will cost $2,086,000 and will produce $281,000 per year for the next 25 years. The cost of capital is 12 percent. Use Appendix D for an approximate answer but calculate your final answers using the formula and financial calculator methods. (Note: In looking up present value factors for this problem, you need to work with the concept of a deferred annuity for the Australian mine. The returns in years 5 through 15 actually represent 11 years; the returns in years 16 through 25 represent 10

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Answer from: genyjoannerubiera

The Australian mine : NPV = $125,865.68

For US MINE: NPV = $117,922.09

Explanation:

The question appears incomplete. Here is the full question:

Highland Mining and Minerals Co. is considering the purchase of two gold mines. Only one investment will be made. The Australian gold mine will cost $1,621,000 and will produce $307,000 per year in years 5 through 15 and $570,000 per year in years 16 through 25. The U.S. gold mine will cost $2,086,000 and will produce $281,000 per year for the next 25 years. The cost of capital is 12 percent. Use Appendix D for an approximate answer but calculate your final answers using the formula and financial calculator methods. (Note: In looking up present value factors for this problem, you need to work with the concept of a deferred annuity for the Australian mine. The returns in years 5 through 15 actually represent 11 years; the returns in years 16 through 25 represent 10 years.)

Calculate the net present value for each project

The Net present value is the present value of after tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator.

For The Australian mine,

Cash flow in year 0 = $1,621,000

Cash flow each year from year 5 to 15 = $307,000

Cash flow each year from year 16 to 25 = $570,000

I = 12%

NPV = $125,865.68

For the US mine ,

Cash flow in year zero = $-2,086,000

Cash flow each year from year one to twenty five = $281,000

I = 12%

NPV = $117,922.09

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

Answer from: Quest

an important city to the south and the region's capital is c. kiev

Answer from: Quest

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

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$1,621,000 and will produce $307,000 per year in years 5 through 15 and $570,000 per year in years 1...