Strip Mining Inc. can develop a new mine at an initial cost of $11 million. The mine will provide a cash flow of $39 million in 1 year. The land then must be reclaimed at a cost of $32 million in the second year.
a. What are the IRRs of this project? (Enter your answers in ascending order. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
IRR 1 _____%
IRR 2 _____%
b. Should the firm develop the mine if the discount rate is 24%? 34%? 110%? 150%? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.)
Discount Rate NPV Develop?
24% ________million ________
34% ________million ________
110% ________million ________
150% ________million ________