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MBA,MCS,M.phil
Devry University
Jan-2008 - Jan-2011
MBA,MCS,M.Phil
Devry University
Feb-2000 - Jan-2004
Regional Manager
Abercrombie & Fitch.
Mar-2005 - Nov-2010
Regional Manager
Abercrombie & Fitch.
Jan-2005 - Jan-2008
12.     The L-S Mining Company is planning to open a new strip mine in western Pennsylvania. The net investment required to open the mine is $10 million. Net cash flows are expected to be þ$20 million at the end of year 1 and þ$5 million at the end of year 2. At the end of year 3, L-S will have a net cash outflow of
$17 million to cover the cost of closing the mine and reclaiming the  land.
a.   Calculate the net present value of the strip mine if the cost of capital is 5, 10, 15, 30, 71, and 80 percent.
b.  What is unique about this project?
c.   Should the project be accepted if L-S’s cost of capital is 10 percent? 20 percent?
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