A Mining Company Plans to Mine a Beach for Rutile

question 78

Multiple Choice

A mining company plans to mine a beach for rutile.To do so will cost $10 million up front and then produce cash flows of $3 million per year for five years.At the end of the sixth year the company will incur shut-down and clean-up costs of $2 million.If the cost of capital is 11%,then what is the NPV for this project?

• A)-$99,212
• B)$12,304
• C)$18,409
• D)$82,416
• E)$111,389

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Definitions:

Narrowing Significantly

The process of becoming considerably more focused or reduced in scope.

Direct Foreign Investment

Investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets.

Technological Knowledge

The information and understanding related to the practical application of tools, machines, materials, and processes used to solve problems or invent new products.

World's Income

The total income generated by all individuals and entities across the globe, often used in comparisons of wealth and economic performance between countries.