Question 1. Table 1 details a proposed gold project.

Table 2 Base data for gold project cash flow calculation

Part 1

For a gold price of $1,000/oz. determine the following:
a) Operating yearly revenue
b) Operating yearly profit/loss
c) Tax depreciation yearly
d) End of year written down value for tax purposes
e) Salvage value in year 5
f) Yearly taxable profit
g) Income tax payable in each year
h) Yearly after tax profit/loss
i) Yearly net cash flow
j) Yearly discounted net cash flow
k) Net present value for the project

Part 2

Repeat part 1 for a gold price of $1,200/oz.
What is the impact on net present value?

Part 3

Using a gold price of $1,000/oz. as per part 1.

The following differential inflation adjustments apply:
- General inflation rate 10%
- Product selling price 4%
- Labour component of operating costs 11%
- Other components of operating costs 9%
- Capital equipment 9%
In addition it may be assumed that labour makes up 55% of the unescalated operating expenditure, other 45%.
Determine the inflation adjusted Net present value

Question 2. A system of mining requires 3 operators at any one time. The mine operates on a three shift basis per day, 6 days per week. Allowing for availability the mining system operates 5,000 hours per year. Each worker costs $55,000 per year. Assuming all personnel are required on service shifts, an absenteeism rate of 5%, determine the hourly cost of labour.

Question 3. For the following projects, determine the payback period.

Question 4. For the following project determine the payback period and the rate of return.

Question 5. An investment of $ 5,000,000 is expected to generate cash flows of $ 2,500,000 over a period of 6 years. The cost of capital is 8%, determine the Present Value Ratio.