Question: Strip Mining Inc. can develop a new mine at an initial cost of $5 million. The mine will provide a cash flow of $30 million

Strip Mining Inc. can develop a new mine at an initial

Strip Mining Inc. can develop a new mine at an initial cost of $5 million. The mine will provide a cash flow of $30 million in year 1 . The land then must be reclaimed at a cost of $28 million in the second year. At which of the following cost of capital's should the company develop the mine? 10%. 25%. 400% 5%

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