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%

---

Definitions:

Reversion Interest

A future interest in real estate that reverts back to the original owner, or their heirs, once a particular condition has been met or a specified time has passed.

Prescriptive Easement

A right to use someone else's land, acquired by continuous and open use over a period as prescribed by law.

Boundary

A line or natural feature that marks the limits or borders of a property, territory, or jurisdiction.

Ejectment

The common law name given to the lawsuit brought by a landlord to have a tenant evicted from the premises.