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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