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Question: Highland Mining and Minerals Co. is considering the purchase of two gold mines. Only one investment will be made. The Australian gold mine will cost $1,600,000 and will produce $300,000 per year in years 5 through 15 and $500,000 per year in years 16 through 25. The U.S. gold mine will cost $2,000,000 and will produce $250,000 per year for the next 25 years. The cost of capital is 10 percent.
a. Which investment should be made? (Note: In looking up present value factors for this problem, you need to work with the concept of a deferred annuity for the Australian mine. The returns in years 5 through 15 actually represent 11 years; the returns in years 16 through 25 represent 10 years.)
b. If the Australian mine justifies an extra 5 percent premium over the normal cost of capital because of its riskiness and the relative uncertainty of cash flows, does the investment decision change?
You determine that investors currently expect a stable growth of about 6 percent in Plastitoys's earnings and dividends. You think that Leisure Products could raise Plastitoys's growth rate to 8 percent per year, without any additional capital inv..
Behavioral measures frequently have the advantage of reducing participant reactivity. Since they can capture the behavior of individuals more honestly, why are they so infrequently used in behavioral research?
Discuss accounts receivables, accounts payables
What is the number of defectives they can be 95% confident that the population mean is below? What is the number of defectives they can be 95% confident that the population mean is above? How do these compare with the two-sided 90% confidence inte..
The assignment aims to develop an understanding of financial statements structure and their use in decision-making. The task is to choose a publicly listed company from the Australian Stock Exchange (ASX)
the current price of adms stock po is 20 and the company is expected to pay a 2.20 dividend next year. if the
Figure assumed that the implicit rate of return from Social Security was the same as the private rate of return available to Bingley from private savings.
Calculate the equivalent effective rate of interest per annum for (a) Interest rote of 5% pa payable quarterly (b) Annual discount rate of 7% pa.
Asset B will have a useful life of 3 years and cost $2.5M; it will have installation costs of $250,000 and a salvage or residual value of $160,000. Which asset will have the greater annual straight-line depreciation and by how much?
The appropriate discount rate is 10 percent. What is the financial break-even point for the project?
How would you resolve this apparent paradox? The value Max[0, X(1 + r)-T - S0] was shown to be the lowest possible value of a European put. Why is this value irrelevant for an American put?
An experiment involves 16 participants. From these, a group of 3 participants is to be tested under a special condition.
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