. A company is planning to recover palladium from spent automobile catalysts. They have a guaranteed supply...
Question:
. A company is planning to recover palladium from spent automobile catalysts. They have a guaranteed supply of palladium containing spent catalysts for a ten year period. The company has to build a new plant for treatment of the catalyst. The following cost information is available.
a. Capital Cost of $220 Million USD
b. Operating Cost of $100 Million USD per year.
c. Production of 100,000 oz. of palladium per year
d. Palladium selling price of $2000 USD per oz.
(a) For this proposed plant, using straight line depreciation, tax rate of 43%, one year construction period, calculate the NPV of the project at 10% interest rate (p.a.c.a.). Repeat at 30% interest rate (p.a.c.a).
b) Repeat the calculation at a palladium selling price of $2500 per oz.
(c) Define the relationship between IRR and NPV.
(d) Estimate the IRR of the project from the calculation in (a) and (b).
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe