Tangshan Mining Company is considering investing in a new mining project. The firm's cost of capital is
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Question:
Tangshan Mining Company is considering investing in a new mining project. The firm's cost of capital is 12 percent and the project is expected to have an initial after-tax cost of $5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of $2,500,000 in year 1, $2,300,000 in year 2, $2,200,000 in year 3, and ($1,300,000) in year 4.
1) Calculate the project's NPV
2) Calculate the project's IRR
3) Should the firm make the investment
Please include the steps to the solutions.
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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