Exam 7: Investment Decision Rules

Use the following information to answer the question(s)below. Rearden Metals is considering opening a strip mining operation to provide some of the raw materials needed in producing Rearden metal.The initial purchase of the land and the associated costs of opening up mining operations will cost $100 million today.The mine is expected to generate $16 million worth of ore per year for the next 12 years.At the end of the 12th year Rearden will need to spend $20 million to restore the land to its original pristine nature appearance. -The payback period for Rearden's mining operation is closest to:

You are opening up a brand new retail strip mall.You presently have more potential retail outlets wanting to locate in your mall than you have space available.What is the most appropriate tool to use if you are trying to determine the optimal allocation of your retail space?

The NPV profile:

Use the table for the question(s)below. Consider the following two projects: -The internal rate of return (IRR)for project A is closest to:

The internal rate of return (IRR)for project Beta is closest to:

If the discount rate for project A is 16%,then what is the NPV for project A?