In: Finance
A mining company is deciding whether to open a strip mine, which
costs $2.5 million. Cash...
A mining company is deciding whether to open a strip mine, which
costs $2.5 million. Cash inflows of $14 million would occur at the
end of Year 1. The land must be returned to its natural state at a
cost of $12 million, payable at the end of Year 2.
- Should the project be accepted if WACC = 10%?
- Should the project be accepted if WACC = 20%?
- What is the project's MIRR at WACC = 10%? Round your answer to
two decimal places. Do not round your intermediate
calculations.
- What is the project's MIRR at WACC = 20%? Round your answer to
two decimal places. Do not round your intermediate
calculations.
- Does MIRR lead to the same accept/reject decision for this
project as the NPV method?
- Does the MIRR method always lead to the same accept/reject
decision as NPV? (Hint: Consider mutually exclusive
projects that differ in size.)
This is all one question, any information will help, thank you
in advance!