The CEO of 'Vale of Brazil' is considering buying a new mine. The mine is forecasted to start earning $5,250,000 of revenue four years from today. Due to a recession in mining industry, and lack of employed mining workers, the production of 'Vale of Brazil' is expecting to decrease by 10.5% p.a. (which have consequent impact on revenue.) Operating costs are 25% of the annual revenue. The mine is expected to be kept for four years, which will be sold for sale price of $4,550,000 at the end of last year. Setting up the mine will cost 1.5 mil today and 2mil in the first year and the year after. 55% of the 'Vale of Brazil' is financed through debt which has a cost of 7% and shareholders require a 3.5 percent premium on creditor's earning. - Q: What is the IRR and NPV?
The CEO of 'Vale of Brazil' is considering buying a new mine. The mine is forecasted to start earning $5,250,000 of revenue four years from today. Due to a recession in mining industry, and lack of employed mining workers, the production of 'Vale of Brazil' is expecting to decrease by 10.5% p.a. (which have consequent impact on revenue.) Operating costs are 25% of the annual revenue. The mine is expected to be kept for four years, which will be sold for sale price of $4,550,000 at the end of last year. Setting up the mine will cost 1.5 mil today and 2mil in the first year and the year after. 55% of the 'Vale of Brazil' is financed through debt which has a cost of 7% and shareholders require a 3.5 percent premium on creditor's earning. - Q: What is the IRR and NPV?
Chemistry
10th Edition
ISBN:9781305957404
Author:Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Publisher:Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Chapter1: Chemical Foundations
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Transcribed Image Text:The CEO of 'Vale of Brazil' is considering buying a new mine. The mine is forecasted
to start earning $5,250,000 of revenue four years from today. Due to a recession in
mining industry, and lack of employed mining workers, the production of 'Vale of
Brazil' is expecting to decrease by 10.5% p.a. (which have consequent impact on
revenue.) Operating costs are 25% of the annual revenue. The mine is expected to
be kept for four years, which will be sold for sale price of $4,550,000 at the end of
last year.
Setting up the mine will cost 1.5 mil today and 2mil in the first year and the year after.
55% of the 'Vale of Brazil' is financed through debt which has a cost of 7% and
shareholders require a 3.5 percent premium on creditor's earning.
-
Q: What is the IRR and NPV?
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