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Question: several years ago a gold mining company purchased the drilling...

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Several years ago a gold mining company purchased the drilling rights for an area of northern Western Australia, at a cost of $300,000, and is now deciding whether there is enough gold to justify digging a gold mine.  If the mine does not go ahead, the mining rights can be sold to another company for $400,000.

How would you describe the value of the mining rights in the NPV analysis of the project?

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What is the present value of $2000 to be received in 4 years, if the interest rate is 10% p.a., compounding monthly?

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Which of the following statements is FALSE?

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