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Question 4 (40 points): Calculate the After-Tax Cash Flow, IRR, and NPV (at minimum ROR...

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Question 4 (40 points): Calculate the After-Tax Cash Flow, IRR, and NPV (at minimum ROR = 20%, after tax) for the following investment with 6-year project life time and a Corporate Tax Rate of 25%: The investor is a large C-Corp. Total reserve is 3,000,000 UNIT. Production will be 500,000 UNIT per year from year 1 to year 6 Mineral rights acquisition cost for property would be $4,500,000 at time zero Exploration cost is expected to be $14,000,000 at time zero Tangible equipment cost is $5,000,000 at time zero Working capital of $1,000,000 also at time zero Equipment depreciation will be based on MACRS 5-years life depreciation starting from year I to year 6 (consider rates from table A-1 for 5-years with half-year convention) The price of commodity is $60 per UNIT which has 6% escalation each year starting from yr 0 Operating cost is $2,500,000 annually with an escalation rate of 5% starting from year 0 Environmental OPEX (Year 6), $2,000,000 escalated 5% starting from year 0 Royalty is 1/8 For depletion cost calculations, amortize the mineral rights acquisition cost equally over 6 years

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