VALUING A COPPER MINING PROJECT USING FORWARD PRICES Harrington Explorations Inc. is interested in expanding its copper mining operations in Indonesia. The area has long been noted for its rich deposits of copper ore, and with copper prices at near-record levels, the company is considering an investment of $60 million to open operations into a new vein of ore that was mapped by company geologists four years ago. The investment would be expensed (a combination of depreciation of capital equipment and depletion costs associated with using up the ore deposit) over five years toward a zero value.

Because Harrington faces a corporate tax rate of 30%, the tax savings are significant.