Reference no: EM132591059
An investor is considering an investment in a copper mine. The following information is available:
A. Equipment costing $300,000 will be required immediately. The equipment will be straight line depreciated over 3 years, and has no salvage value.
B. There is also an immediate need for $50,000 for fuel inventory that needs to be maintained at all times.
C. The investment will generate an annual accounting profit of $80,000.
D. At the end of year 3, there are required environmental clean up costs of $60,000
E. The investor is also considering a similar investment that will generate a return of 14%.
REQUIRED:
Question 1: Calculate the Net Present Value of this project
Question 2: Calculate the Payback period of this project