Bullock Gold Mining

Year Cash Flow

0 ($500,000,000)
1 $60,000,000
2 $90,000,000
3 $170,000,000
4 $230,000,000
5 $205,000,000
6 $140,000,000
7 $110,000,000
8 $70,000,000
9 ($80,000,000)

1)
Payback Period
Year Beginning Unrecovered Investment Cash Inflow
0 $500,000,000 0
1 $500,000,000 $60,000,000
2 $440,000,000 $90,000,000
3 $350,000,000 $170,000,000
4 $180,000,000 $230,000,000

Since only $180,000,000 need to be recovered in year 4 while the cash flow is
$205,000,000, then the amount would be recovered in a fraction of year 4. To calculate
this fraction: $180,000,000 / $205,000,000 = 0.88.

Payback Period 3.88 years

IRR 18.87%
MIRR 14.75%
NPV $128,922,977.75

2)
Yes, the company should open the mine since it has a positive NPV

3)
 Ending Unrecovered Investment
$500,000,000
$440,000,000
$350,000,000
$180,000,000
($50,000,000)

e the cash flow is

ion of year 4. To calculate