Strip Mining Inc can develop a new mine at an initial cost of $14 million The mine will provide a cash flow of $42 million in 1 year The land then must be reclaimed at a cost of $29 million in the second year a What are the IRRs of this project (Enter your answers in ascending order Do not round intermediate calculations Enter your answers as a percent rounded to 2 decimal places ) IRR 1 IRR 2 b Should the firm develop the mine if the discount rate is 3 13 80 120 (Negative amounts should be indicated by a minus sign Do not round intermediate calculations Enter your answers in millions rounded to 3 decimal places ) Discount rate NPV Develop 3 $ million (Click to select)YesNo 13 $ million (Click to select)YesNo 80 $ million (Click to select)YesNo 120 $ million (Click to select)YesNo

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Question: Strip Mining Inc. can develop a new mine at an initial cost of $14 million. The mine will provide a cash flow of $42 million

Strip Mining Inc. can develop a new mine at an initial cost of $14 million. The mine will provide a cash flow of $42 million in 1 year. The land then must be reclaimed at a cost of $29 million in the second year.

a.	What are the IRRs of this project? (Enter your answers in ascending order. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)


IRR 1	%
IRR 2	%

b.	Should the firm develop the mine if the discount rate is 3%? 13%? 80%? 120%? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)

Discount rate	NPV	Develop?
3%	$ million	(Click to select)YesNo
13%	$ million	(Click to select)YesNo
80%	$ million	(Click to select)YesNo
120%	$ million	(Click to select)YesNo

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