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Should the firm make the investment

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Reference no: EM133176802

Question - New Gold Mining Company is considering investing in a new mining project. The firm's cost of capital is 12 percent and the project is expected to have an initial after-tax cost of $5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of $2,500,000 in year 1, $2,300,000 in year 2, $2,200,000 in year 3, and ($1,300,000) in year 4?

Required -

(i) Calculate the project's NPV.

(ii) Should the firm make the investment?

Reference no: EM133176802

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