Hutti Gold Mines Limited (HGML) is a gold mining and production business in India. The mines...

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Hutti Gold Mines Limited (HGML) is a gold mining and production business in India. The mines used by HGML are mainly located in Hutti-Muski Precambrian greenstone geological belt. Assume the company is exploring new mines sites in India, and the management estimates that the new site will be productive for ten years. Based on the information provided by the company's geologist, the company's financial officer has to perform an analysis of the new site and make recommendation on whether the company should open it. The financial officer has used the information provided by the geologist and estimated the expected revenue, expenses of opening the mine and the annual operating expenses. If the company opens the mines, it will cost $500 million today, and it will have a cash outflow of $50 million at year 10 to close the mines site. The expected cash flows each year from the mine are shown in the following table. The company has a 15% required return on the new sites. Year Cash Flow (million) 0 -500 1 90 2 100 3 150 4 180 5 190 6 140 7 100 -8 80 9 60 10 -50 1. Determine net present value (NPV), payback period and profitability index of the proposed mine. Hutti Gold Mines Limited (HGML) is a gold mining and production business in India. The mines used by HGML are mainly located in Hutti-Muski Precambrian greenstone geological belt. Assume the company is exploring new mines sites in India, and the management estimates that the new site will be productive for ten years. Based on the information provided by the company's geologist, the company's financial officer has to perform an analysis of the new site and make recommendation on whether the company should open it. The financial officer has used the information provided by the geologist and estimated the expected revenue, expenses of opening the mine and the annual operating expenses. If the company opens the mines, it will cost $500 million today, and it will have a cash outflow of $50 million at year 10 to close the mines site. The expected cash flows each year from the mine are shown in the following table. The company has a 15% required return on the new sites. Year Cash Flow (million) 0 -500 1 90 2 100 3 150 4 180 5 190 6 140 7 100 -8 80 9 60 10 -50 1. Determine net present value (NPV), payback period and profitability index of the proposed mine.