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:

Corporate Strategies

Plans or methods employed by a company to achieve its business goals and secure a competitive position in the market.

Corporate Purpose

The stated, overarching goals and intentions of a corporation, guiding its decisions and operations.

Mission Statement

A formal summary of the aims and values of a company, organization, or individual.

Operating Plans

Comprehensive outlines detailing a company's objectives and the strategies and processes to be implemented to achieve those objectives within a specific timeframe.