Question

A mining company makes annual deposits of $240,000 into a reclamation fund for 20 years. What interest should the investmentPlease, show the formulas and step by step on how to find the answer!!

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Annual deposit = 240,000

Future value of fund = 10,000,000

Time period for deposits = 20 years (20 annual payments)

Find the rate using interpolation

- 240000(F/A, i%, 20) + 10000000 = NPV = 0

When i = 7%, NPV = 161081.84 and when i = 8% NPV = -982871.43

Hence the required interest rate is i = 7% + (8% - 7%)*(161081.84/(161081.84+982871.43))

= 7.14%

Add a comment
Know the answer?
Add Answer to:
Please, show the formulas and step by step on how to find the answer!! A mining company makes annual deposits of $240,00...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Please show ALL EXCEL FORMULAS! BETHESDA MINING COMPANY Bethesda Mining is a midsized coal mining company...

    Please show ALL EXCEL FORMULAS! BETHESDA MINING COMPANY Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio, Pennsylvania, West Virginia, and Kentucky. The company operates deep mines as well as strip mines. Most of the coal mined is sold under contract, with excess production sold on the spot market. The coal mining industry, especially high-sulfur coal operations such as Bethesda, has been hard-hit by environmental regulations. Recently, however, a combination of increased demand for coal...

  • Bethesda Mining Company please answer neatly and organized, and I will give a thumbs up in...

    Bethesda Mining Company please answer neatly and organized, and I will give a thumbs up in return thank you. Please solve NPV and IRR and analyze the case and also answer if Bethesda can go forward with opening the mine. Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio, Pennsylvania, West Virginia, and Kentucky. The company operates deep mines as well as strip mines. Most of the coal mined is sold under contract, with excess...

  • Please, show the formulas and step by step on how to find the answer!! Two mutually exclusive alternatives of A and B ha...

    Please, show the formulas and step by step on how to find the answer!! Two mutually exclusive alternatives of A and B have both useful lives of 5 years. For Alternative A, there is an initial cost of $2,500 and annual benefits of $746. For Alternative B, there is an initial cost of $6,000 and annual benefits of $1,664. By following each of the following methods, define which alternative should be chosen? (30 pts) i. Annual Cash Flow Analysis (the...

  • Bethesda Mining is a mid-sized coal mining company with 20 mines located in Ohio, Pennsylvania, West...

    Bethesda Mining is a mid-sized coal mining company with 20 mines located in Ohio, Pennsylvania, West Virginia, and Kentucky. The company operates deep mines as well as strip minds. Most of the coal mined is sold under contract, with excess production sold on the spot market.The coal mining industry, especially high-sulfur coal operations such as Bethesda, has been hard-hit by environmental regulations. Recently, however, a combination of increased demand for coal and new pollution reduction technologies has led to an...

  • BETHESDA MINING COMPANY Bethesda Mining is a midsized coal raining company with 20 mines located in...

    BETHESDA MINING COMPANY Bethesda Mining is a midsized coal raining company with 20 mines located in Ohio, Pennsyl- vania, West Virginia, and Kentucky. The company operates deep mines as well as strip mines. Most of the coal mined is sold under contract, with excess production sold on the spot market. The coal mining industry, especially high-sulfur coal operations such as Bethesda, has been hard-hit by environmental regulations. Recently, however, a combination of increased demand for coal and new pollution reduction...

  • please show all steps 4. A company deposits $20000 in a bank at the end of...

    please show all steps 4. A company deposits $20000 in a bank at the end of every year for 10 years, The company makes no subsequent payment for the next 8 years but withdraws $25000 at the end of 18 years. How much would be in the account at the end of 20 years? The bank pays 8% interest compounded annually. (ii) How much annual deposit should be made if your goal is to have $25,000 at the end of...

  • Please, show the formulas and step by step on how to find the answer!!

    Please, show the formulas and step by step on how to find the answer!!

  • A mining project has funding requirements over the next four years of $2 million, $4 million,...

    A mining project has funding requirements over the next four years of $2 million, $4 million, $8 a million, and $5 million, respectively. Assume that all the money for a given year is required at the beginning of the year. The mining company plans to sell exactly enough long-term bonds to cover the project funding requirements and all of these bonds, regardless of when they are sold, must be paid off in the same distant future year. The cost of...

  • Step by step solution needed for all parts of the question and each part with answers thanks ☺ A mining company conside...

    Step by step solution needed for all parts of the question and each part with answers thanks ☺ A mining company considers opening a new excavation site. The project requires an investment of £25 million at the outset, followed by £17 million in 15 months' time. It is expected that the new site will provide income over a 30 year period starting from the end of the second year. Net income from the project will be received continuously at a...

  • Please, show the formulas and step by step on how to find the answer!! Consider the...

    Please, show the formulas and step by step on how to find the answer!! Consider the following two alternatives: Year A 0 -$2,000 +$800 +$800 3 +$800 B $2,800 +$1,100 +$1,100 +$1,100 2 If the minimum attractive rate of return is 5%, which alternative should be selected?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT