Question: several years ago a gold mining company purchased the drilling...
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?
What is the present value of $2000 to be received in 4 years, if the interest rate is 10% p.a., compounding monthly?
Which of the following statements is FALSE?