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Investment question?


The professor asked us whether we should recommend our clients to buy stocks in the following? how do you calculate if this mining company is worth buying stocks in? how do I calculate it in excel to show how I came up with my decision to my professor? I provide company information below? what numbers is important to look at how do i see if the company is worth investing based on these numbers. can explain how you calculate? what should i do! I have no idea! would you buy stocks in this company based on these numbers?

Canyon Resources Simulation

Construction Starts in Year 2008
Years in Cash Flow 12
Capital Costs $250,000,000
Total Output (Oz) 4,900,000
Cash Operating Costs (Oz) $200
Gold Price $380
Debt Rate (%) 50.00%
Interest Rate 7.50%
Term (Yrs.) 8
Loan PMT $21,340,878
Inflation Rate 2.50%

State/Local Taxes (Oz) $17.00
Royalty Rate (%) 5.00%
Federal Tax Rate (%) 34.00%
Depletion Allowance 50.00%
After Tax Cost of Capital 17.50%
Pre-Tax Cost of Capital 26.52%

Net Present Value $14,481,692
Internal Rate of Return 20.41%
Pre-Tax Return 30.93%
Appraised Value $389,481,692

Revenue
2009 $155,166,667
2010 $155,166,667
2011 $155,166,667
2012 $155,166,667
2013 $155,166,667
2014 $155,166,667
2015 $155,166,667
2016 $155,166,667
2017 $155,166,667
2018 $155,166,667
2019 $155,166,667
2020 $155,166,667

Expenses S&L Taxes
$81,666,667 $6,941,667
$83,708,333 $6,941,667
$85,801,042 $6,941,667
$87,946,068 $6,941,667
$90,144,719 $6,941,667
$92,398,337 $6,941,667
$94,708,296 $6,941,667
$97,076,003 $6,941,667
$99,502,903 $6,941,667
$101,990,476 $6,941,667
$104,540,238 $6,941,667
$107,153,744 $6,941,667

Looks like it would be great for a long term investment. Day traders & flippers might do ok but the long termers would do well.

Tags
  Earn Money   Direct Investment   Debt Financing   Capital Investment   Business Investment   Business financing   Business Invest   Business Debt
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