With the market price of gold at ?C$1,562.50 per ounce? (C$stands for Canadian? dollars), Maritime Resources? Corp., aCanadian mining? firm, would like to assess the financialfeasibility of reopening an old gold mine that had ceasedoperations in the past due to low gold prices. Reopening the minewould require an? up-front capital expenditure of ?C$67.9 millionand annual operating expenses of ?C$19.43 million. Maritime expectsthat over a? 5-year operating life it can recover 174, 000 ouncesof gold from the mine and that the project will have no terminalvalue. Maritime uses? straight-line depreciation, has a 21.04?%corporate tax? rate, and has? a(n) 11.1?% cost of capital.

a. Calculate the operating cash flows for the gold mineproject.

Operating Cash Flows for Gold Mine Project:

Revenue                $ ________

Operating Expenses _______

EBITS                              _______

Depreciation                    _______

NPBT                              ________

Taxes                               _______

NPAT                               _______

OCF                                 _______

b. Depict on a timeline the net cash flows for the gold mineproject.

c. Calculate the internal rate of return? (IRR) for the goldmine project.

d. Calculate the net present value? (NPV) for the gold mineproject.

e. Make a recommendation to accept or reject the gold mine?project, and justify your answer.

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