Mini 2

BETHESDA MINING COMPANY

Year

QTY Produced

1

2

3

4

Contract QTY

620000

680000

730000

590000

Spot Market Price:

Contract Price:

500000

500000

500000

500000

$76.00

$82.00

Current Price of land:

Charitable expense:

Networking Capital = 5% sales:

Charitable expense TAX Deduction:

New Equipment:

$5,500,000.00

$6,000,000.00

5.00%

$2,280,000.00

$85,000,000.00

VC:

FC Per Year:

Cost of reclamation of the land:

$31.00

$4,100,000.00

$2,700,000.00

Tax Rate:

Required return Rate:

Initial Cash Outflow (B16+B12+G4):

Book value of the equipment (B16-E40):

38.00%

0.12

-$93,006,000.00

$26,554,000.00

% of the Equip. value after 4 years of org. price

Market val. Of equip:

60.00%

$51,000,000.00

Taxes to be paid on sales since book vale < than

market value.

After Tax selvage vale:

12.00%

$9,289,480.00

$41,710,520.00

OCF

Year

Sales

1

2

3

4

5

6

VC

$50,120,000.00

$54,680,000.00

$58,480,000.00

$47,840,000.00

$0.00

$0.00

$19,220,000.00

$21,080,000.00

$22,630,000.00

$18,290,000.00

Depreciation 4 years:

Year

OCF

0

NWC CF

-$93,006,000.00

1

2

3

4

5

6

$72,880,210.00

Payback Period =

Profitability Index:

IRR=

NPV (H50+B43)=

$21,231,670.00

$26,200,270.00

$25,334,270.00

$19,813,270.00

-$1,674,000.00

$2,280,000.00

-$228,000.00

-$190,000.00

$532,000.00

$2,392,000.00

-$20,125,790.00

3.31 Years

$1.06

14.39%

$5,718,491.29

Since NPV is positive Open new mine / accept the project.

$ Contract

$ Spot

$ Total Sales (F4*$B$14) Beg. NWC

End NWC

$41,000,000.00

$9,120,000.00

$50,120,000.00 $2,506,000.00

$2,734,000.00

$41,000,000.00

$13,680,000.00

$54,680,000.00 $2,734,000.00

$2,924,000.00

$41,000,000.00

$17,480,000.00

$58,480,000.00 $2,924,000.00

$2,392,000.00

$41,000,000.00

$6,840,000.00

$47,840,000.00 $2,392,000.00

$0.00

MACRS Depreciation

1

2

3

4

5

6

7

Check

FC

$4,100,000.00

$4,100,000.00

$4,100,000.00...