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Question: C D ezto mheducation.comhm.tpx Highland Mining and Minerals Co. is considering the purchase of tw…
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Question: C D ezto mheducation.comhm.tpx Highland Mining and Minerals Co. is considering the purchase of tw...
Question: C D ezto mheducation.comhm.tpx Highland Mining and Minerals Co. is considering the purchase of tw...

Show transcribed image text C D ezto mheducation.comhm.tpx Highland Mining and Minerals Co. is considering the purchase of two gold mines. nt be made. The Australian gold mine wil cost $1.623.000 and wil produce S330.000 per year in years 5 through 15 and $543000 per year in years 16 through 25. The US gold mine wil cost $2.096,000 and wil produce $2 next 25 years. The cost of capital is 12 percent. Use Appendix Dfor an annuity for the Australian mine. The returns in years 5 through 15 and financial caloulator In up present value actually represent 11 years the retums in years 16 represent 10 years) a-1. Calculate the net present value for each project Do not round intermediate calculations and round your answers to 2 decimal places.) Net Present Value The Australian mine The U.S. mine a-2. Which investment should be made? O US, mine b-1. Assume the Australian mine justnes an extra 3 percent premium over the normal cost of captal because of its riskiness and relative uncertainty of cash flows. Calculate the new net present value given this assumption. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net Present Value The Australian mine b-2. Does the new assumption change the investment decision? eBook & eBook Risk and the CapitaLBudgeting Process

C D ezto mheducation.comhm.tpx Highland Mining and Minerals Co. is considering the purchase of two gold mines. nt be made. The Australian gold mine wil cost $1.623.000 and wil produce S330.000 per year in years 5 through 15 and $543000 per year in years 16 through 25. The US gold mine wil cost $2.096,000 and wil produce $2 next 25 years. The cost of capital is 12 percent. Use Appendix Dfor an annuity for the Australian mine. The returns in years 5 through 15 and financial caloulator In up present value actually represent 11 years the retums in years 16 represent 10 years) a-1. Calculate the net present value for each project Do not round intermediate calculations and round your answers to 2 decimal places.) Net Present Value The Australian mine The U.S. mine a-2. Which investment should be made? O US, mine b-1. Assume the Australian mine justnes an extra 3 percent premium over the normal cost of captal because of its riskiness and relative uncertainty of cash flows. Calculate the new net present value given this assumption. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net Present Value The Australian mine b-2. Does the new assumption change the investment decision? eBook & eBook Risk and the CapitaLBudgeting Process

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