3. RareEarth Mines is considering investing $1.200,000 in a mine that will produce $300,000 worth of...

 

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3. RareEarth Mines is considering investing $1.200,000 in a mine that will produce $300,000 worth of ore in the first year. As the more accessible ore is removed it will become more difficult to extract the ore. As a result, it is expected that the value of the ore mined will decline at a rate of 6% per year forever. If the appropriate discount rate for valuing this investment is 10%, the net present value of this mining operation today is closest to: a) $675,000. b) $1,800,000. c) $1,875,000. d) $6,300,000. 3. RareEarth Mines is considering investing $1.200,000 in a mine that will produce $300,000 worth of ore in the first year. As the more accessible ore is removed it will become more difficult to extract the ore. As a result, it is expected that the value of the ore mined will decline at a rate of 6% per year forever. If the appropriate discount rate for valuing this investment is 10%, the net present value of this mining operation today is closest to: a) $675,000. b) $1,800,000. c) $1,875,000. d) $6,300,000.

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Calculate the net present value as follows A 30 Year 31 32 33 34 Formulas ... View the full answer