A Mining Company Plans to Mine a Beach for Rutile

question 73

Multiple Choice

A mining company plans to mine a beach for rutile. To do so will cost $14 million up front and then produce cash flows of $7 million per year for five years. At the end of the sixth year the company will incur shut-down and clean-up costs of $6 million. If the cost of capital is 13.0%, then what is the MIRR for this project?

• A) -60.97%
• B) -78.39%
• C) -87.10%
• D) -95.81%

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Definitions:

Real Output

The cumulative worth of all products and services manufactured within an economy, taking into account adjustments for changes in inflation.

Price Levels

A measure of the average prices of goods and services in the economy.

Aggregate Supply Curve

A graphical representation showing the relationship between the total supply of goods and services within an economy at different overall price levels.

Keynes' View

Refers to the economic theories and principles of John Maynard Keynes, emphasizing the role of government intervention in stabilizing the economy, particularly through fiscal and monetary policies.