Reference no: EM132819939
1.) Suppose you are offered $10,600 today but must make the following payments:
YearCash Flows ($)0$ 10,600 1-4,900 2-4,400 3-3,400 4-2,700
What is the IRR of this offer?
2.) The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, "This is a golden opportunity." The mine will cost $2,600,000 to open and will have an economic life of 11 years. It will generate a cash inflow of $365,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11 years, the mine will be abandoned. Abandonment costs will be $420,000 at the end of Year 11.
What is the IRR for the gold mine?