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ladybugys
ladybugys
12.08.2021 • 
Business

Highland Mining and Minerals Co. is considering the purchase of two gold mines. Only one investment will be made. The Australian gold mine will cost $1,694,000 and will produce $359,000 per year in years 5 through 15 and $532,000 per year in years 16 through 25. The U.S. gold mine will cost $2,085,000 and will produce $295,000 per year for the next 25 years. The cost of capital is 11 percent. Use Appendix D for an approximate answer but calculate your final answers using the formula and financial calculator methods. (Note: In looking up present value factors for this problem, you need to work with the concept of a deferred annuity for the Australian mine. The returns in years 5 through 15 actually represent 11 years; the returns in years 16 through 25 represent 10 years.)

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