You are considering an open-pit mining operation. The cash flow pattern issomewhat unusual since you must invest in some mining equipment, conductoperations for two years, and then restore the sites to their original condition.You estimate the net cash flows to be as follows: N Cash flow 0 -$1,600,0001 1,500,0002 1,500,0003 -700,000 What is the approximate rate of return of this investment?(a) 25%(b)38%(c) 42%(d)62%
You are considering an open-pit mining operation. The cash flow pattern issomewhat unusual since you must invest in some mining equipment, conductoperations for two years, and then restore the sites to their original condition.You estimate the net cash flows to be as follows: N Cash flow 0 -$1,600,0001 1,500,0002 1,500,0003 -700,000 What is the approximate rate of return of this investment?(a) 25%(b)38%(c) 42%(d)62%
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are considering an open-pit mining operation. The cash flow pattern is
somewhat unusual since you must invest in some mining equipment, conduct
operations for two years, and then restore the sites to their original condition.
You estimate the net cash flows to be as follows:
N Cash flow
0 -$1,600,000
1 1,500,000
2 1,500,000
3 -700,000
What is the approximate rate of
(a) 25%
(b)38%
(c) 42%
(d)62%
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