Ferdinand gold mining gerdinand, the owner of ferdinand gold mining, is evaluating a new gold mine in fort mcmurray. paul pogba, me company's geologist, has just finished his analysis of the mine site. he has estimated that the mine would ductive for eight years, after which the gold would be completely mined.
year cash flow
0 -$450,000,000
1 63,000,000
2 85,000,000
3 120,000,000
4 145,000,000
5 175,000,000
6 120,000,000
7 95,000,000
8 75,000,000
9 70,000,000
paul has taken an estimate of the gold deposits to julia davids, the company's financial officer. julia has been asked by rio to perform an analysis of the new mine and present her recommendation on whether the company should open the new mine.
julia has used the estimates provided by paul to determine the revenues that could be expected from the mine. she has also projected the expense of opening the mine and the annual operating expenses. if the company opens the years from costs associated with closing the mine and reclaiming the area surrounding it. the expected cash ining has a 12 percent required return on mine, it will cost $450 million today, and it will have a cash outflow of $70 million nine ay in flows e all of its gold mines.
(1) construct a spreadsheet to calculate the payback period internal rate of return modified internal rate of return modified internal rate of return and net present value of the proposed mine 2. based on your analysis should the company open the mine