Question: (e) What extra information do you need to know, in order to calculate when (which year) this Iron Ore mine project becomes profitable, i.e.
(e) What extra information do you need to know, in order to calculate when (which year) this Iron Ore mine project becomes profitable, i.e. starts to accumulate profit? Suppose $100M is spent on the capital investment at the start of the mining project, followed by spending $10M development cost at the end of each year, while production and selling of the ore starts after 5 years with an annual margin (profit) of $30M. How do you solve this problem and what will be your primary unknown in this calculation? (5 marks) (f) Assume a range of values for your missing parameter values in the above problem, where you need to calculate when (which year) will this Iron Ore mine project accumulate profit, if $100M are spent as the capital investment at the start of the project followed by $10M development cost at the end of each year, while production and selling of the ore starts after 5 years with an annual margins (profits) of $30M. (10 marks)
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