a silver mine has reserves of 25,000 troy ounces of

Project Description:

a silver mine has reserves of 25,000 troy ounces of silver. for simplicity, assume the following schedule for extraction, ore purification, and sale of the silver ore: also assume the following:• the mine, which will exhaust its supply of silver ore in two years, is assumed to have no salvage value. • there is no option to shut down the mine prematurely. • the current price of silver is $4 per troy ounce.• today’s forward price for silver settled one year from now is $4.20 per troy ounce. • today’s forward price for silver settled two years from now is $4.50 per troy ounce.• the cost of extraction, ore purification, and selling is $2 per troy ounce now and at any point over the next two years. • the risk-free return is 5 percent per year. what is the value of the silver mine?
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Price Type: Negotiable

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