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Get PriceSolution Guide Answer Key FINANCE Bullock Gold Mining Case Study Solution Seth Bullock the owner of Bullock Gold Mining is evaluating a new gold mine in South Dakota Dan Dority the company s geologist has just finished his analysis of the mine site He has estimated that the mine would be productive for eight years after which the gold would be
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Get PriceSeth Bullock the owner of Bullock Gold Mining is evaluating a new gold mine in South Dakota Dan Dority the company s geologist has just finished his analysis of the mine site He has estimated that the mine would be productive for eight years after which the gold would be completely mined
Get PriceIf the company opens the mine it will cost $625 million today and it will have a cash outflow of $90 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it The expected cash flows each year from the mine are shown in the nearby table Bullock Gold Mining has a 12 percent required return
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Get PriceANSWERS 1 Required Return K = 12% A Net Present Value NPV = 450 000 000 63 000 000/ 1 0 12 1 000/ 1 0 12 2 120 000 000/ 1 0 12 3 145 000 000/ 1 0 12 4 175 000 000/ 1 0 12 5 120 000 000/ 1 0 12 6 95 000 000/ 1 0 12 7 75 000 000/ 1 0 12 8 70 000 000/ 1 0 12 9 = 56 962
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