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 $1,600,000 1,500,000 1,500,000 -700,000 1 3 What is the approximate rate of return of this investment? (a) 25% (b)38% (c) 42% (d)62%

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
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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
$1,600,000
1,500,000
1,500,000
-700,000
What is the approximate rate of return of this investment?
(a) 25%
(b)38%
(c) 42%
(d)62%
123
Transcribed Image Text: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 $1,600,000 1,500,000 1,500,000 -700,000 What is the approximate rate of return of this investment? (a) 25% (b)38% (c) 42% (d)62% 123
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