Reference no: EM13703276
BULLOCK GOLD MINING
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company's geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the company's financial officer. Alma has been asked by Seth to perform an analysis of the new mine and present her recommendation on whether the company should open the new mine.
Alma has used the estimates provided by Dan 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 mine, it will cost $650 million today, and it will have a cash outflow of $72 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it. The expected cash flows each year from the mine are shown in the table on this page. Bullock Mining has a 12 percent required return on all of its gold mines.
Year Cash Flow
0 -$650,000,000
1 80,000,000
2 121,000,000
3 162,000,000
4 221,000,000
5 210,000,000
6 154,000,000
7 108,000,000
8 86,000,000
9 -72,000,000
QUESTIONS
1. Construct a spreadsheet to calculate the payback period, 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?
3. Bonus question: Most spreadsheets do not have a built-in formula to calculate the payback period. Write a VBA script that calculates the payback period for a project
|
Determine the specific volume for water vapor
: Determine the specific volume for water vapor using the following three methods. Assuming the first method is the most accurate, calculate the % difference of the other two methods against the first method. The temperature of the water is 800 °F and ..
|
|
Air enters a compressor operating at steady state
: Air enters a compressor operating at steady state at 1 atm. with a specific enthalpy of 290 kJ/kg and exits at a higher pressure with a specific enthalpy of 1023 kJ/kg. The mass flow rate is 0.1 kg/s. If the compressor power input is 77 kW. Neglect f..
|
|
For the spring-mass-damper system
: For the spring-mass-damper system (refer to Ogata Figure 4.1). (i) Find the equations of motion (the differential equation). Assume m = 1, b = 7, and k = 12. 1(ii) Assuming f(t) is a step function, find the Laplacian transform, X(s). (iii) Find the t..
|
|
Frictionless piston-cylinder
: A frictionless piston-cylinder contains H2O initially at 1000 kPa and 200C. The system is slowly cooled at constant pressure to 20C. Determine the temperature at which you would expect two phases to exist. Calculate the work for the entire process
|
|
Bullock gold mining
: Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company's geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight ye..
|
|
Bicycle floor pump has a cylindrical tube
: A bicycle floor pump has a cylindrical tube with an inside diameter of 1.0 inches. On the pump's upstroke, a diaphragm check valve opens and brings air in at 13.0 psia. The air is then transferred to the tire during the down stroke. The stroke length..
|
|
Hollow spherical shape
: A hollow spherical shape (internal radius Ri = 2.7cm; external radius Re = 3cm) that will be submerged in a larger container filled with water to a height of 20cm. Determine the magnitude and direction of the applied force necessary to maintain the t..
|
|
With a proper sequence of thermal processing
: With a proper sequence of thermal processing, aluminum alloyed with 4% copper can be caused to contain a large number of very small particles of the hard intermetallic compound CuAl2. How would you expect the yield strength of such processed alloy to..
|
|
Two aqueous hydrogen bromide solutions
: Two aqueous hydrogen bromide solutions containing 6.00 wt% HBr (SG = 1.0402) and 65.0 wt% HBr (SG = 1.7613) are mixed to form a 2.86 molar HBr solution (SG = 1.1557).
|