Question Details

[solution] » Hickock Mining is evaluating when to open a gold mine. The mine

Brief item decscription

Step-by-step solution file

Item details:

Hickock Mining is evaluating when to open a gold mine. The mine

Hickock Mining is evaluating when to open a gold mine. The mine has 41,600 ounces of gold left that can be mined, and mining operations will produce 5,200 ounces per year. The required return on the gold mine is 12 percent, and it will cost $33.2 million to open the mine. When the mine is opened, the company will sign a contract that will guarantee the price of gold for the remaining life of the mine. If the mine is opened today, each ounce of gold will generate an aftertax cash flow of $1,320 per ounce. If the company waits one year, there is a 60 percent probability that the contract price will generate an aftertax cash flow of $1,520 per ounce and a 40 percent probability that the aftertax cash flow will be $1,220 per ounce.


What is the value of the option to wait? (Enter your answer in dollars, not millions of dollars, e.g.. 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Expected price after one year


Today price




per year difference


PVIF at 12%


Value of option to wait 1400




80 per ounce








2,066,538 8 years


About this question:

This question was answered on: Feb 21, 2020

PRICE: $24 (18.37 KB)

Buy this answer for only: $24

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy (Deadline assured. Flexible pricing. TurnItIn Report provided)

Pay using PayPal (No PayPal account Required) or your credit card. All your purchases are securely protected by PayPal.

Need a similar solution fast, written anew from scratch? Place your own custom order

We have top-notch tutors who can help you with your essay at a reasonable cost and then you can simply use that essay as a template to build your own arguments. This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student. New solution orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

Order Now