Test:Unit 4 Midterm Question 16
This Test: 100 pts possible

You are considering investing in a new gold mine in South Africa. Gold in South Africa is buried very​ deep, so the mine will require an initial investment of million. Once this investment is​ made, the mine is expected to produce revenues of million per year for the next 20 years. It will cost million per year to operate the mine. After 20​ years, the gold will be depleted. The mine must then be stabilized on an ongoing​ basis, which will cost million per year in perpetuity. Calculate the IRR of this investment. ​(Hint​: Plot the NPV as a function of the discount​ rate.)

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

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