What is the npv in one year to wait

Assignment Help Finance Basics
Reference no: EM13303038

Hickock Mining is evaluating when to open a gold mine. The mine has 60,000 ounces of gold left that can be mined, and mining operations will produce 7,500ounces per year. The required return on the gold mine is 12%, and it will cost $14million to open the mine. When the mine is opened, the company will sign a contract that will guarantee the price of gold for the remaining life of the mine. If the mine is opened today, each ounce of gold will generate an aftertax cash flow of $450 per ounce. I the company waits one year, there is a 60% probability that the contract price will generate an aftertax cash flow of $500 per ounce and a 40% probability that the aftertax cash flow will be $410 per ounce. What is the NPV in one year to wait, NPV today for waiting, What is the value of the option to wait.

Reference no: EM13303038

Questions Cloud

Estimate the frequency of the sound : Two loudspeakers in a plane, 5 m apart, are playing the same frequency. If you stand 14 m in front of the plane of the speakers, What is the frequency of the sound
What is the expected rate of return on the project : Consider the following probability distribution of returns estimated for a proposed project that involves a new ultrasound machine.
Calculate for the whole catchment values of annual average : A watershed has four sub-areas. The annual precipitation and evaporation from each of the sub-areas are given in Table(below). Assume that there is no change in groundwater storage on an annual basis and calculate for the whole catchment the value..
What is the weighted average cost of capital for project : What is the weighted average cost of capital for this project?
What is the npv in one year to wait : What is the NPV in one year to wait, NPV today for waiting, What is the value of the option to wait.
How much benzene can be optimally removed by the gac filter : A municipal water supply became contaminated with benzene (Cw=50g/L). It was decided that until the contaminant source could be identified and remediated, all household faucets would be fitted with a granular activated carbon(GAC) filter bed to ad..
Determine what would be better a truss with all 60 angles : what would be better a truss with all 60 angles or a truss with a 30 60 90 angle for a bridge design what would be the best design
The journal of the european academy of dermatology : Refer to the Journal of the European Academy of Dermatology and Venereology study of the link between nickel allergies and use of mascara or eye shadow
Estimate the factor effects : Estimate the factor eeff ects. Construct a normal probability plot of these e ects. Which e effects appear large?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the future value of the annuity (ordinary)

You have $50,000 in your bank account. You plan to save $5,000 at the end of each year for the next 10 years. The interest rate is 8% per annum, compounded monthly. What is the future value of the annuity (ordinary)?

  What is alumbat current tie ratio

If the company does not maintain a TIE ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. What is Alumbat's current TIE ratio?

  Calculating theoretical stock price of ibm

Recalculate IBM's stock using the P/E ratio model and the needed info found in the IBM pdf file. Explain why the present stock price is different from the price arrived at using CGM (Constant Growth Model).

  How much will you have 4 years from today

You want to quit your job and go back to school for a law degree 4 years from now, and you plan to save $3,500 per year, beginning immediately. You will make 4 deposits in an account that pays 5.7% interest.

  Determine annual financing cost

Walters Manufacturing Corporation has been approached by a commercial paper dealer offering to sell an issue of commercial paper for the company. The dealer indicates that Walters could sell a $5 million issue maturing in 182 days at an interest rate..

  What is the most that jelena should pay for made-it stock

She has determined that the Made-It's Beta is 2; that the risk-free rate is 1%, and that the S&P 500 is projected to grow at 10%.

  Computation of expected rate of return and beta

Computation of expected rate of return and Beta and Demonstrate to your colleagues how you would calculate the expected rate of return also called r-hat

  Finding the correct statements

The best way to judge the effectiveness of a company cash management procedures is to look at the ratio of its cash balances to its sales. The higher this ratio, the more effective the firm's cash management procedures are.

  Calculate the after-tax cost of debt

Calculate the firm's weighted average cost of capital using he capital structure weights shown in teh following table. (Round answer to the nearest 0.1%)

  Will the expansionary open market operation have a greater

Will the expansionary open market operation have a greater short run effect on the interest rate in Discretia or Fixedland? Explain with reference to one graph.

  Interest rates and capital markets

Assume you are the manager in a manufacturing business. How are the capital markets relevant to effective performance of your job?

  Calculate amount of the payment

the ACCT300 Commissioner authorized a special loan contract with Astros Company, whereby Astros Company would borrow $125,000 at 9% interest. Conditions of the agreement require the repayment of the loan with seven yearly payments,

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd