Deep Mining and Precious Metals Are Separate Firms That Are

question 47

Multiple Choice

Deep Mining and Precious Metals are separate firms that are both considering a silver exploration project.Deep Mining is in the actual mining business and has an aftertax cost of capital of 12.8 percent.Precious Metals is in the precious gem retail business and has an aftertax cost of capital of 10.6 percent.The project under consideration has initial costs of $575,000 and anticipated annual cash inflows of $102,000 a year for ten years.Which firm(s) ,if either,should accept this project?

• A)Company A only
• B)Company B only
• C)both Company A and Company B
• D)neither Company A or Company B
• E)cannot be determined without further information

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Definitions:

Qualitative Methods

Research strategies focusing on understanding concepts, thoughts, or experiences without primarily using mathematical analysis.

Research Project

A systematic scientific endeavor to discover new information or understandings, apply new methods, or test theories, which often involves careful planning, data collection, and analysis.

Quantitative Research

A research method focused on gathering numerical data and performing statistical, mathematical, or computational techniques.

Essence

The intrinsic, fundamental nature or most important quality of something or someone.