Question

please show work and why

Duld Review View == Paste Calibri (Body) 11 VA A B I Ur Eva. Av fx 2 w Me 20 x D F G H Based on your analysis, should the com Year 0 1 2 3 4 5 6 7 8 9 | CFS -850,000,000 165,000,000 190,000,000 225,000,000 245,000,000 235,000,000 195,000,000 175,000,000 155,000,000 -120,000,000 0 1 12 NPV 16 Decision 17 Explain your decision 19 IRR 20 Decision Explain your decision Payback 24 Decision 25 Explain your decision Discounted Payback Decision 29 Explain your decision 4 ) Case study Template Sheet3 + Ready

Answer 1

Answer:

Year Cumulative PV factor Discounted Cash Lows (1/(1+12%)^Year Cash flows Cumulative Discounted Cash flows -850,000,000 -850,000,000 165,000,000 -685,000,000 190,000,000 -495,000,000 225,000,000 -270,000,000 245,000,000 -25,000,000 235,000,000 210,000,000 195,000,000 405,000,000 175,000,000 580,000,000 155,000,000 735,000,000 -120,000,000 615,000,000 1-850,000,000 0.8928571 147,321,429 0.7971939 151,466,837 0.7117802 160,150,556 0.6355181 155,701,929 0.5674269 133,345,311 0.5066311 98,793,069 0.4523492 79,161,113 0.4038832 62,601,900 0.3606100 -43,273,203 -850,000,000 -702,678,571 -551,211,735 -391,061,179 -235,359,2501 -102,013,939 -3,220,870 75,940,243 138,542, 143 95,268,940 NPV 95,268,940.02 Decision OPEN THE MINE Explain your reason NPV is positive IRR 15.33% Decision OPEN THE MINE Explain your reason IRR is greater than required return of 12% Payback 4.11 Years Decision OPEN THE MINE Explain your reason Payback period is lower than cut off period of 5 Years Discounted Payback 6.04 Decision DO NOT OPEN THE MINE Explain your reason Discounted Payback period is higher than cut off period of 5 Years

Above excel with 'show formula' is as follows:

1 Year CES 2 O =B2 2 -850000000 165000000 190000000 225000000 245000000 235000000 195000000 175000000 155000000 - 120000000 Cumulative Cash Lows PV factor (1/(1+12%) Year Discounted Cash flows Cumulative Discounted Cash flows =B2D2 =C2+B3 =1/(1+12%) A3 =B3D3 =C3+B4 =1/(1+12%) A4 =B4D4 =F3+E4 =C4+B5 =1/(1+12%) A5 =B5.5 =F4-5 =C5+B6 =1/(1+12%)*A6 =B6*D6 =F5+E6 =C6+B7 =1/(1+12%)^A7 =B7D7 =F6+E7 =C7+B8 =1/(1+12%) A8 =B8*D8 =F7+E8 =C8+B9 =1/(1+12%) A9 =B9D9 =F8+E9 =C92B10 =1/(1+12%) A10 =B10*D10 =F9+E10 =C10+B11 =1/(1+12%) A11 =B11 D11 =F10+E11 14 NPV 15 Decision Explain your reason =NPV(12%,B3:B11)+B2 OPEN THE MINE NPV is positive 16 18 IRR =IRR(B2:B11) 19 Decision OPEN THE MINE 20 Explain your reason IRR is greater than required return of 12% 22 Payback =A6+(-C6/B7) Years 23 Decision OPEN THE MINE 24 Explain your reason Payback period is lower than cut off period of 5 Years 26 Discounted Payback |=A8+(-F8/E9) 27 Decision DO NOT OPEN THE MINE 28 Explain your reason Discounted Payback period is higher than cut off period of 5 Years