The production of a gold mine decreases by 5% per year. What is the approximate half-life for the production decline?
The production of a gold mine decreases by 5% per year. What is the approximate half-life...
VALUING A GOLD MINE USING R STUDIO (REAL OPTIONS) Consider a gold mine with an estimated inventory of 1 million ounces and a capacity output rate of 50,000 ounces per year. The firm owns the rights to this mine for the next 20 years. The cost of opening the mine is $100 million, and the average production cost is $250 per ounce; once initiated, the production cost is expected to grow 5% a year. a. Using R, Download time series...
Hickock Mining is evaluating when to open a gold mine. The mine has 40,000 ounces of gold left that can be mined, and mining operations will produce 5,000 ounces per year. The required return on the gold mine is 10 percent, and it will cost $33.0 million to open the mine. When the mine is opened, the company will sign a contract that will guarantee the price of gold for the remaining life of the mine. If the mine is...
The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, “This is a golden opportunity.” The mine will cost $916,000 to open and will have an economic life of 11 years. It will generate a cash inflow of $143,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11 years, the mine will...
The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, "This is a golden opportunity." The mine will cost $3,200,000 to open and will have an economic life of 11 years. It will generate a cash inflow of $425,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11 years, the mine will...
The value of a dollar decreases by 23% every year. Find the half-life in this situation. The half-life is years. (Do not round until the final answer. Then round to the nearest tenth as needed.)
The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, “This is a golden opportunity.” The mine will cost $3,200,000 to open and will have an economic life of 11 years. It will generate a cash inflow of $425,000 at the end of the first year, and the cash inflows are projected to grow at 8 percent per year for the next 10 years. After 11 years, the mine will...
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company’s geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the company’s financial officer. Alma has been asked by Seth to perform an analysis of the new...
Bullock Gold Mine Case Study Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company’s geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the company’s financial officer. Alma has been asked by Seth to perform...
Barrick is comparing two gold mines. Mine A: The mine is expected to make $3.5 billion in year 1, $4.5 billion in year 2, and $5.5 billion in years 3-6 and $4.25 billion in years 7-10. At the end of year 10, Barrick will need to spend $202 million on environmental clean-up costs and expects the residual value to be $200 billion. Mine B: The mine is currently in operation and produces $4.1 billion per year. At the end of...
4. A gold mine is projected to produce $20000 during its first year of operation, $19000 the second year, $18000 the third year, and so on continuing this pattern. If the mine is expected to produce for a total of 10 years, and the effective annual interes rate is 8%, what is the value of the present worth?