Black Lung Mining is considering opening a new coal mine. Black Lung’s beta is 0.8. Black Lung paid $15 million for the property six years ago. A recently completed feasibility study estimated that new machinery and equipment at the mine will cost $33 million, working capital requirements will increase by $500,000 immediately, and employee-training expenses will be $125,000. The feasibility study cost $1,000,000. What amount should Black Lung use as its initial outlay in the capital budgeting analysis
Black Lung Mining is considering opening a new coal mine. Black Lung’s beta is 0.8. Black Lung paid $15 million for the property six years ago. A recently completed feasibility study estimated that new machinery and equipment at the mine will cost $33 million, working capital requirements will increase by $500,000 immediately, and employee-training expenses will be $125,000. The feasibility study cost $1,000,000. What amount should Black Lung use as its initial outlay in the capital budgeting analysis
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
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Black Lung Mining is considering opening a new coal mine. Black Lung’s beta is 0.8.
Black Lung paid $15 million for the property six years ago. A recently completed
feasibility study estimated that new machinery and equipment at the mine will cost $33
million, working capital requirements will increase by $500,000 immediately, and
employee-training expenses will be $125,000. The feasibility study cost $1,000,000.
What amount should Black Lung use as its initial outlay in the capital budgeting
analysis?
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