Question: can I get some help with the excel functions? Andrew owns a coal company and is considering opening a new one. The mine will cost

can I get some help with the excel functions?  can I get some help with the excel functions? Andrew owns
a coal company and is considering opening a new one. The mine
will cost $120 million to open. If this money is spent immediately,

Andrew owns a coal company and is considering opening a new one. The mine will cost $120 million to open. If this money is spent immediately, the mine will generate $20 million for the next 10 years. After that, the coal will run out and the site must be cleaned and maintained at environmental standards. The cleaning and maintenance are expected to cost $2 million per year in perpetuity. What does the IRR rule say about whether you should accept this opportunity? If the cost of capital is 8%, what does the NPV rule say? 5 6 7 S S 120 20 10 2 896 Cost of new mine (million) Annual cash flows (million) Number of periods (years) Cleaning costs (million) Cost of capital B 9 S 10 11 12 13 Cost of Capital 196 NPV (million) 14 296 D B $ Cost of new mine (million) Annual cash flows (million) Number of periods (years) Cleaning costs (million) Cost of capital 120 20 10 2 8% $ NPV (million) Cost of Capital 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% Requirements 1 In cell range E14:E33, by using the PV function and cell references, write an expression to calculate the NPV of the investment opportunity for cost of capital 1% 20%, respectively (20 pt.). 2 In cell range C35:546, insert a Line chart to plot the NPV profile of the investment opportunity with the cost of capital (cell range D14:033) on the horizontal axis and the NPV (cell range E14:E33) on the vertical axis. Use the following labels: title: NPV Profile, horizontal axis label: Cost of Capital and vertical axis label NPV (million) (3 int)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!