A mining investment is more likely to generate revenues of $500,000 per year for the next 10 years of service life. However, the inves $300,000 per year. The investors' MARR is 8% per year. Answer the following two questions: Click the icon to view the interest and annuity table for discrete compounding when i= 8% per month. Mo 1 Calculate the PW based on the optimistic estimate of the net annual revenues. O A. $3.36 Million O B. $3.47 Million OC. $5.37 Million O D. $2.01 Million O E. $3.58 Million 2. Calculate the PW based on the expected net annual revenues calculated using the three-point estimation technique. O A. $5.37 Million O B. $3.36 Million OC. $2.01 Million O D. $3.58 Million O E. $3.47 Million
A mining investment is more likely to generate revenues of $500,000 per year for the next 10 years of service life. However, the inves $300,000 per year. The investors' MARR is 8% per year. Answer the following two questions: Click the icon to view the interest and annuity table for discrete compounding when i= 8% per month. Mo 1 Calculate the PW based on the optimistic estimate of the net annual revenues. O A. $3.36 Million O B. $3.47 Million OC. $5.37 Million O D. $2.01 Million O E. $3.58 Million 2. Calculate the PW based on the expected net annual revenues calculated using the three-point estimation technique. O A. $5.37 Million O B. $3.36 Million OC. $2.01 Million O D. $3.58 Million O E. $3.47 Million
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
100%
Transcribed Image Text:A mining investment is more likely to generate revenues of $500,000 per year for the next 10 years of service life. However, the investors think that there is a possibility that the revenues could be as high as $800,000 per year or as low
$300,000 per year. The investors' MARR is 8% per year. Answer the following two questions:
Click the icon to view the interest and annuity table for discrete compounding when i= 8% per month.
More Info
1 Calculate the PW based on the optimistic estimate of the net annual revenues.
Discrete Compounding; i= 8%
ire
O A. $3.36 Million
Single Payment
Compound
Amount
Uniform Series
Compound
Amount
Factor
Sinking
Fund
Capital
Recovery
Factor
O B. $3.47 Million
Present
Worth Factor
Present
Worth Factor
O C. $5.37 Million
Factor
Factor
O D. $2.01 Million
To Find F
To Find P
To Find F
To Find P
To Find A
To Find A
Given P
Given F
Given A
Given A
Given F
Given P
O E. $3.58 Million
F/P
PIF
FIA
PIA
A/F
A/P
1
1.0800
0.9259
1.0000
0.9259
1.0000
1.0800
2. Calculate the PW based on the expected net annual revenues calculated using the three-point estimation technique.
2
1.1664
0.8573
2.0800
1.7833
0.4808
0.5608
0.3080
0.2219
3
1.2597
0.7938
3.2464
2.5771
0.3880
O A. $5.37 Million
4
1.3605
0.7350
4.5061
3.3121
0.3019
5
1.4693
0.6806
5.8666
3.9927
0.1705
0.2505
O B. $3.36 Million
6.
1.5869
0.6302
7.3359
4.6229
0.1363
0.2163
O C. $2.01 Million
7
1,7138
0.5835
8.9228
5.2064
0.1121
0.1921
O D. $3.58 Million
0.5403
0.5002
8
1.8509
10.6366
5.7466
0.0940
0.1740
0.1601
0.1490
9
1.9990
12.4876
6.2469
0.0801
O E. $3.47 Million
10
2.1589
0.4632
14.4866
6.7101
0.0690
11
2.3316
0.4289
16.6455
7.1390
0.0601
0.1401
12
2.5182
0.3971
18.9771
7.5361
0.0527
0.1327
13
2.7196
0.3677
21.4953
7.9038
0.0465
0.1265
14
2.9372
0.3405
24.2149
8.2442
0.0413
0.1213
15
3.1722
0.3152
27.1521
8.5595
0.0368
0.1168
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education