Bullock Gold Mining

Year
0
1
2
3
4
5
6
7
8
9
1)
Payback Period
Year
0
1
2
3
4

Cash Flow
($500,000,000)
$60,000,000
$90,000,000
$170,000,000
$230,000,000
$205,000,000
$140,000,000
$110,000,000
$70,000,000
($80,000,000)

Beginning Unrecovered Investment

$500,000,000
$500,000,000
$440,000,000
$350,000,000
$180,000,000

Cash Inflow
0
$60,000,000
$90,000,000
$170,000,000
$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
IRR
MIRR
NPV

3.88
18.87%
14.75%
$128,922,977.75

years

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