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Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit...
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of new equipment and timbers $ 430,000 Working capital required $ 215,000 Annual net cash receipts $ 150,000 * Cost to construct new roads in year three $ 63,000 Salvage value of equipment in four years $ 88,000 *Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company’s required rate of return is 18%. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit...
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase
of equipment to exploit a mineral deposit on land to which the
company has mineral rights. An engineering and cost analysis has
been made, and it is expected that the following cash flows would
be associated with opening and operating a mine in the area:
Cost of new equipment and timbers
$
410,000
Working capital required
$
135,000
Annual net cash receipts
$
150,000
*
Cost to construct new roads in...
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit...
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase
of equipment to exploit a mineral deposit on land to which the
company has mineral rights. An engineering and cost analysis has
been made, and it is expected that the following cash flows would
be associated with opening and operating a mine in the area:
Cost of new equipment and timbers
$
370,000
Working capital required
$
115,000
Annual net cash receipts
$
130,000
*
Cost to construct new roads in...
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit...
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase
of equipment to exploit a mineral deposit on land to which the
company has mineral rights. An engineering and cost analysis has
been made, and it is expected that the following cash flows would
be associated with opening and operating a mine in the area:
Cost of new equipment required and timbers
$
360,000
Working capital required
$
100,000
Annual net cash inflows*
$
140,000
Cost to construct new roads in...
Problem 13-16 Net Present Value Analysis [LO13-2] Windhoek Mines, Ltd., of Namibia, is contemplating the purchase...
Problem 13-16 Net Present Value Analysis [LO13-2]
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase
of equipment to exploit a mineral deposit on land to which the
company has mineral rights. An engineering and cost analysis has
been made, and it is expected that the following cash flows would
be associated with opening and operating a mine in the area:
Cost of new equipment and timbers
$
430,000
Working capital required
$
215,000
Annual net cash receipts
$
150,000...
Problem 12-16 Net Present Value Analysis [LO12-2] Windhoek Mines, Ltd., of Namibia, is contemplating the purchase...
Problem 12-16 Net Present Value Analysis [LO12-2]
Windhoek Mines, Ltd., of Namibia, is contemplating the purchase
of equipment to exploit a mineral deposit on land to which the
company has mineral rights. An engineering and cost analysis has
been made, and it is expected that the following cash flows would
be associated with opening and operating a mine in the area:
Cost of new equipment and timbers
$
400,000
Working capital required
$
220,000
Annual net cash receipts
$
155,000...
1. Problem 13-16 Net Present Value Analysis [LO13-2] Windhoek Mines, Ltd., of Namibia, is contemplating the...
1. Problem 13-16 Net Present Value Analysis [LO13-2] Windhoek
Mines, Ltd., of Namibia, is contemplating the purchase of equipment
to exploit a mineral deposit on land to which the company has
mineral rights. An engineering and cost analysis has been made, and
it is expected that the following cash flows would be associated
with opening and operating a mine in the area: Cost of new
equipment and timbers $ 390,000 Working capital required $ 125,000
Annual net cash receipts $...
Part aSekwanele Ltd is a manufacturing company in Windhoek, Namibia,producing and selling steelbeams....
Part a
Sekwanele Ltd is a manufacturing company in Windhoek, Namibia,
producing and selling steel
beams. On 1 January 2019 the company acquired a property with the
following details:
N$
Purchase price
Land: stand number 234 Mandume Ndemufayo 900 000
Office building thereon 2 200 000
Repairs and maintenance incurred for the year 70 000
Approximately 5% of the floor space is used as the administrative
head office of the entity while the
remainder of the building is leased out...
Bearcreek Mines paid $433,000 for the right to extract ore from a 450,000-ton mineral deposit. In...
Bearcreek Mines paid $433,000 for the right to extract ore from
a 450,000-ton mineral deposit. In addition to the purchase price,
Bearcreek Mines paid a $155 filing fee to the county recorder, a
$2,800 license fee to the state of Utah, and $95,045 for a geologic
survey. Because the company purchased the rights to the minerals
only, it expects this mineral rights asset to have a residual value
of zero when it is fully depleted. During the first year of...
Quencher Limited is planning to produce mineral water. It is contemplating to purchase a plant with a capacity of 100,000 bottles a month.
Quencher Limited is planning to produce mineral water. It is contemplating to purchase a plant with a capacity of 100,000 bottles a month. For the first year of operation the company expects to sell between 60,000 to 80,000 bottles. The budgeted costs at each of the two levels are as follows:
GHS
Particular 60,000 bottles 80,000 bottles
Material 360,000 480,000
Labour 200,000 260,000
Factory overheads 120,000 150,000
Administration expenses 100,000 110,000
The production would be sold through retailers who will...
Altima Ltd, a manufacturer of edible oils, is contemplating the purchase b. of a new oil...
Altima Ltd, a manufacturer of edible oils, is contemplating the
purchase b. of a new oil processing machine to replace the existing
one. The existing machine was acquired two years ago at a cost of
Shs.4,000,000. The useful life of this machine was originally
expected to be five years with no salvage value, but after a
critical analysis, the financial analyst has now estimated that the
machine will have an economic life of 10 years with a salvage value
of...
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