After discovering a new gold vein in the balochistan mountains, ZSZ mining corporation must decide whether to go ajead and develop the deposit. The most cost effective method of mining gold is sulphuric acid extraction, a process that could result in environmental damage. Before proceeding with the extraction, ZSZ must spend Rs. 12000000 for new mining equipment and pay Rs. 1650000 for its installation. The gold mined will net the firm an estimated Rs 4350000 each year for the 5 year life of the vein. ZSZs cost of capital is 14%. For the purposes of this problem, assume that the cash inflows occur at the end of the year. What are the project's NPV and IRR? Should this project be undertaken if environmental impacts were not a consideration? How should environmental effects be considered when evaluating this, or any other project? How might these concepts affect the decision in part B?
After discovering a new gold vein in the balochistan mountains, ZSZ mining corporation must decide whether to go ajead and develop the deposit. The most cost effective method of mining gold is sulphuric acid extraction, a process that could result in environmental damage. Before proceeding with the extraction, ZSZ must spend Rs. 12000000 for new mining equipment and pay Rs. 1650000 for its installation. The gold mined will net the firm an estimated Rs 4350000 each year for the 5 year life of the vein. ZSZs cost of capital is 14%. For the purposes of this problem, assume that the
What are the project's NPV and IRR?
Should this project be undertaken if environmental impacts were not a consideration?
How should environmental effects be considered when evaluating this, or any other project? How might these concepts affect the decision in part B?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
