Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. The company estimated the following cash flows related to opening and operating a mine in the area: Cost of new equipment and timbers Working capital required Annual net cash receipts Cost to construct new roads in three years Salvage value of equipment in four years *Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 18%. Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted? Required A $ 400,000 $ 220,000 $ 155,000 $ 64,000 $ 89,000 Complete this question by entering your answers in the tabs below. Required B Required D Answer is complete but not entirely correct. Not present value S 58,204 What is the net presen the proposed mining project? Note: Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount. Required B >
Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. The company estimated the following cash flows related to opening and operating a mine in the area: Cost of new equipment and timbers Working capital required Annual net cash receipts Cost to construct new roads in three years Salvage value of equipment in four years *Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 18%. Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted? Required A $ 400,000 $ 220,000 $ 155,000 $ 64,000 $ 89,000 Complete this question by entering your answers in the tabs below. Required B Required D Answer is complete but not entirely correct. Not present value S 58,204 What is the net presen the proposed mining project? Note: Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount. Required B >
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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Question
Transcribed Image Text:Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the
company has mineral rights. The company estimated the following cash flows related to opening and operating a mine in the area:
Cost of new equipment and timbers
Working capital required
Annual net cash receipts
Cost to construct new roads in three years
Salvage value of equipment in four years
*Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth.
The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for
reinvestment elsewhere. The company's required rate of return is 18%.
Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.
Required:
a. What is the net present value of the proposed mining project?
b. Should the project be accepted?
$ 400,000
$ 220,000
$ 155,000.
$ 64,000
$ 89,000
Complete this question by entering your answers in the tabs below.
Required B
Not present value
Required A
Required B
What is the net presented the proposed mining project?
Note: Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.
S
Answer is complete but not entirely correct.
58,204
Required B >
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