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What is the optimal time for carla vista to sell the mine

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Reference no: EM132853609

Question - Carla Vista Manufacturing Company currently owns a mine that is known to contain a certain amount of gold. Since Carla Vista does not have any gold-mining expertise, the company plans to sell the entire mine and base the selling price on a fixed multiple of the spot price for gold at the time of the sale. Analysts at Carla Vista have forecast the spot price for gold and have determined that the price will increase by 15 percent, 11 percent, 9 percent, and 6 percent during the next one, two, three, and four years, respectively. If Carla Vista's opportunity cost of capital is 10 percent, what is the optimal time for Carla Vista to sell the mine?

Reference no: EM132853609

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