The Utah Mining Co is opened a new coal mine near Provo, Utah The mine cost was $900,000 and has an economic life of 9 years It will generate cash inflow of $175,000 next year and will be equal over the life of the project Abandonment cost will be $145,000 at the end of year 9 The cost of capital for the project is 10 According to the decision rule for the internal rate of return, is this project a wise investment for the company The annual IRR is 12 42 and the investment does not create wealth for the company The annual IRR is 13 2 and the investment does not create wealth for the company The annual IRR is 11 38 and the investment does create wealth for the company The annual IRR is 11 38 and the investment does not create wealth for the company The annual IRR is 13 2 and the investment does create wealth for the company

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Question: The Utah Mining Co. is opened a new coal mine near Provo, Utah. The mine cost was $900,000 and has an economic life of 9

The Utah Mining Co. is opened a new coal mine near Provo, Utah. The mine cost was $900,000 and has an economic life of 9 years. It will generate cash inflow of $175,000 next year and will be equal over the life of the project. Abandonment cost will be $145,000 at the end of year 9. The cost of capital for the project is 10%.

According to the decision rule for the internal rate of return, is this project a wise investment for the company?

The annual IRR is 12.42% and the investment does not create wealth for the company.
		The annual IRR is 13.2% and the investment does not create wealth for the company.
		The annual IRR is 11.38% and the investment does create wealth for the company.
		The annual IRR is 11.38% and the investment does not create wealth for the company.
		The annual IRR is 13.2% and the investment does create wealth for the company.

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