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 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?

Question 24 options:

A.)10%.

B.) 25%.

C.) 400%

D.)5%.

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