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The base of this exercise is the mini case on the bottom of page 315 in your text

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Question;The base of this exercise is the mini case on the bottom of page 315 in your text (Peru resources). However, please take the following additional or changed information into account:?The quantity and selling price for hydrated zircons are estimated at 2,500 and $200, not what is stated in the text?The mine will only operate at 75% of capacity in year 1, increasing to 100% for year 2?Operating expenses are 12.5% of revenues?Working capital would represent 10% of sales?At the end of seven years it is expected that all product will have been mined?Assume no inflation of prices or costs?Assume all ?negative? taxes are either able to be fully offset against other taxes due or refundable?Ignore the cheaper design option1Prepare a base case NPV calculation2.Prepare an optimistic and pessimistic NPV calculations3.Perform sufficient other sensitivity analysis to identify which two assumptions used in your model (other than the tax rate) have the greatest impact on the NPV

 

Paper#43398 | Written in 18-Jul-2015

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