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Copperhead Resources Corp. is a Wyoming natural resources company. The managers are considering buying the rights...
Maple Leaf Oil Corp. is a Canadian natural resources company. They are considering buying the rights...
Maple Leaf Oil Corp. is a Canadian natural resources company. They are considering buying the rights to a piece of land that has strong potential for gold production through surface extraction techniques. They project the following net cash flows ($ millions Canadian): Year 1: $5 Year 2: $15 Year 3: $30 Year 4: $20 After year 4, the gold field will be played out and not profitable to continue mining. The purchase price for this land is $40 million Canadian....
In 2019, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property had a...
In 2019, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property had a residual value of P5,000,000. However, the entity is required to restore the property to the original condition at a discounted amount of P2,000,000. In 2019, the entity spent P1,000,000 in development costs and constructed a building on the property costing P3,000,000. The entity does not anticipate that the building will have utility after the natural resources are removed. In 2020, an amount of P1,000,000...
Ore Body Corp. (OBC) runs an open-pit copper mine on land leased from the provincial government....
Ore Body Corp. (OBC) runs an open-pit copper mine on land leased from the provincial government. OBC constructed several outbuildings on the mine site at a total cost of $15 million, all of which were ready for use on January 1, 20X3. Pertinent details of OBC’s operation follow: When OBC is finished mining, a term of the lease requires OBC to remove all buildings and remediate the land by creating a nature park. The estimated cost of removal and...
Eureka Mining is considering buying a new machine. There are two choices available for the company....
Eureka Mining is considering buying a new machine. There are two choices available for the company. It may buy either machine P or machine Q. Cash flows for these two-mutually exclusive machines are given below: Year Machine P Machine Q 0 -25,000 -25,000 1 13,000 5,500 2 12,315 7,500 3 6,200 12,000 4 4,200 13,000 The IRR of Project P is given as 20% and the IRR of Project Q is given as 16%. Based on the IRRs given, which...
Areva Resources Namibia Plc. undertook a project involving the construction of a seawater desalination plant at...
Areva Resources Namibia Plc. undertook a project involving the construction of a seawater desalination plant at Wlotzkasbaken near Swakopmund. The project was completed on 01 January 2017 at a cost of N$10 000 000. The directors of Areva Resources believe their multi-million dollar project shall be able to supply all the water to be consumed at Trikkopje mine, some 40km into the dessert. After 5 years, the company has an obligation to dismantle and restore the environment in compliance with...
Problem 6-15 Nash Mining Company recently purchased a quartz mine that it intends to work for...
Problem 6-15 Nash Mining Company recently purchased a quartz mine that it intends to work for the next 10 years. According to state environmental laws, Nash must restore the mine site to its original natural prairie state after it ceases mining operations at the site. To properly account for the mine, Nash must estimate the fair value of this asset retirement obligation. This amount will be recorded as a liability and added to the value of the mine on Nash's...
Asgard Corp, is considering to purchase a smaller kingdom called Midgard. Asgard’s analysts project that the...
Asgard Corp, is considering to purchase a smaller kingdom called Midgard. Asgard’s analysts project that the merger will result in the following incremental free cash flows, horizon values, and tax shields: Year 1 2 3 4 Free cash flow $2 $4 $4 $6 Unlevered horizon value $80 Tax shield $1 $2 $3 $4 Horizon value of tax shield $30 Assume that all cash flows occur at the end of the year and are in millions. Midgard is currently financed with...
Assess whether from a utilitarian, rights, justice and caring perspective, Unocal did the right thing in...
Assess whether from a utilitarian, rights, justice and caring
perspective, Unocal did the right thing in deciding to invest in
the pipeline and then in conducting the project as it did. In your
view, and using your utilitarian, rights, justice and caring
assessments, did Unocal do the right thing?
CASE:
Unocal in Burma Union Oil Company of California, or Unocal, was founded in 1890 to develop oil fields around Los Angeles and other parts of California. By 1990, Unocal had...
This question is a variant of the Sport Hotel example that was presented in class, in...
This question is a variant of the Sport Hotel example that was
presented in class, in the class notes, and in the Real Option
chapter.
The change to consider is this: suppose that the value of the hotel
is one of two values: $9.4 million if the city is
successful in obtaining the franchise (and not $8 million as in the
original problem) or $3.7 if the city is not
successful in obtaining the franchise (and not $2 million as...
The president of the company you work for has asked you to evaluate the proposed acquisition...
The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm’s R&D department. The equipment’s basic price is $85,000, and it would cost another $20,000 to modify it for special use by your firm. The chromatograph, which falls into the MACRS 3-year class, would be sold after 3 years for $40,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. Use of the equipment...
Problem 6-15 Nash Mining Company recently purchased a quartz mine that it intends to work for the next 10 years. According to state environmental laws, Nash must restore the mine site to its original natural prairie state after it ceases mining operations at the site. To properly account for the mine, Nash must estimate the fair value of this asset retirement obligation. This amount will be recorded as a liability and added to the value of the mine on Nash's...
Assess whether from a utilitarian, rights, justice and caring
perspective, Unocal did the right thing in deciding to invest in
the pipeline and then in conducting the project as it did. In your
view, and using your utilitarian, rights, justice and caring
assessments, did Unocal do the right thing?
CASE:
Unocal in Burma Union Oil Company of California, or Unocal, was founded in 1890 to develop oil fields around Los Angeles and other parts of California. By 1990, Unocal had...
This question is a variant of the Sport Hotel example that was
presented in class, in the class notes, and in the Real Option
chapter.
The change to consider is this: suppose that the value of the hotel
is one of two values: $9.4 million if the city is
successful in obtaining the franchise (and not $8 million as in the
original problem) or $3.7 if the city is not
successful in obtaining the franchise (and not $2 million as...
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