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mantparn mantparn
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4 years ago
Tangshan Mining Company is considering investing in a new mining project. The firm's cost of capital is 12 percent and the project is expected to have an initial after-tax cost of $5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of $2,500,000 in year 1, $2,300,000 in year 2, $2,200,000 in year 3, and ($1,300,000) in year 4?
(a)   Calculate the project's NPV.
(b)   Calculate the project's IRR.
(c)   Should the firm make the investment?
Textbook 

Principles of Managerial Finance


Edition: 14th
Authors:
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alovelyalovely
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4 years ago
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More questions for this book are available here
No, the firm should not accept the project since it provides negative NPV.
"It is better to fail in originality than to succeed in imitation."

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