Ask Question
5 August, 18:08

The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, "This is a golden opportunity." The mine will cost $2,700,000 to open and will have an economic life of 11 years. It will generate a cash inflow of $375,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11 years, the mine will be abandoned. Abandonment costs will be $430,000 at the end of Year 11. a. What is the IRR for the gold mine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

+1
Answers (1)
  1. 5 August, 20:02
    0
    The IRR for the gold mine is 14.00%

    Explanation:

    Year Cash flows

    0 ($2,700,000.00)

    1 375000

    2 405000

    3 437400

    4 472392

    5 510183.36

    6 550998.0288

    7 595077.8711

    8 642684.1008

    9 694098.8289

    10 749626.7352

    11 379596.874

    IRR 14.00%

    Therefore, The IRR for the gold mine is 14.00%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, "This is a golden ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers