bullockgoldminingfinal-130418214838-phpapp02

8/19/2019 bullockgoldminingfinal-130418214838-phpapp02

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Bullock Gold Mining

Corporate Finance Case StudyUun Ainurrofq 1111200141

Yoong Khai Hung

1111200139

Khatereh Azarnoor

1101600315

Aliakbar

Bahre!"a1091200261

#e$geni%& 'e&e$& 1111200131


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Case Overview

Seth Bullock(Owner)

Dan Dority(Geologist)

Alma Garrett(CO)

!i "ellas##we $lan to work on a new Gold Minein South Dakota %%

&ot Bad## 'ased on my estimationthat site would 'e $roductive "oreight year sir##

Alright gentleman Chill out##*ll do the "inancial analysis to hel$you making a rational decision


3/28

Alma*s Cash "low +stimation

Year +a&h )lo,

0 -.400/000/00000

1 -5/000/00000

2 -90/000/00000

3 -140/000/00000

4 -10/000/00000

5 -195/000/00000

6 -130/000/00000

* -95/000/00000

-60/000/00000

9 -.95/000/00000

0 1 2 3 4 5 6 7 8 9

$(500,000,000.00

$(400,000,000.00

$(300,000,000.00

$(200,000,000.00

$(100,000,000.00

$!

$100,000,000.00

$200,000,000.00

$300,000,000.00nitial nvestment

,eclamation Cost

Cash n"low -

,evenue Stream

Our com$anyre.uired rate o"return is /01


4/28

Bonus 2uestion (3BA Scri$t)

2uestions o" 4he Case

5ay'ack 5eriod

,, 6 M,,

inancial Decision

&53 (&et 5resent 3alue)


5/28

5ay'ack 5eriod (S$readsheet)

7ormula 5ay'ack 5eriod in C/8 9:C;-(B

7ormula Disc 5ay'ack 5eriod in +/8 9:+


6/28

Discounted 5ay'ack 5eriod

Year nitial n$e&t"ent i&ounte +a&h7o,

0 !$400,000,000

1 $85,000,000 " (1.121 # $75,892,857

2 $90,000,000 " (1.122

# $71,747,449

3 $140,000,000 " (1.123

# $99,649,235

4 $180,000,000 " (1.124 # $114,393,254

5 $195,000,000 " (1.125 # $110,648,237

6 $130,000,000 " (1.126 # $65,862,046

7 $95,000,000 " (1.127 # $42,973,175

8 $60,000,000 " (1.128


7/28

4he Conce$t o" &53

%e &et 'resent a)ue o* t%e pro+ect copares %o- uc% t%e pro+ect cost -it%%o- uc% it rin/s in ters o* todays do))ar a)ue. e use a procedureca))ed t%e discounted cas% o- (CF a)uation. The NPV of the project can becalculated by the following formula:

NPV = PV0 + PV1 + PV2 + PV3 …… + PVn

PV =

• t - the time of the cash flow

• i - the discount rate (the rate of return)

• - the net cash flow (the amount of cash! inflow minus outflow)

•


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&53 (Manual Calculation)

Year +a&h )lo, +alulation 8re&ent alue

0 -.400/000/00000

-.400/000/000

1 -5/000/00000

5/000/000 :.1121

-*5/92/5*

2 -90/000/00000

90/000/000 :.1122

-*1/*4*/449

3 -140/000/00000

140/000/000 :.1123

-99/649/235

4 -10/000/00000

10/000/000 :.1124

-114/393/254

5 -195/000/00000

195/000/000 :.1125

-110/64/23*

6 -130/000/00000

130/000/000 :.1126

-65/62/046

* -95/000/00000

95/000/000 :.112*

-42/9*3/1*5

-60/000/00000

60/000/000 :.112

-24/232/994

9 -.95/000/00000

;95/000/000 :.1129

-.34/25*/952


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&53

&53 "ormula in Ms +cel 9 &53 (rate values)

&53 "ormula in a"ter correction 9 &53 (rate values) = initial cost


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,,

,, "ormula in Ms +cel 9 ,, (values)

M,, "ormula in Ms +cel 9 M,, (values "inance rate reinvest rate )


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,,

>> ? 24@

13/***/690: ?1*1/141/29431:13;

? 09


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M,,

Year a&h 7o, uture $alue ator at 15@ter"inal $alue -

1 5 000 000 .112C210 465 *0

2 90 000 000 .112C*19 961 32*

3 140 000 000 .112C62*6 335 1*6

4 10 000000 .112C531* 221 503

5 195 000 000 .112C4306 36 2*5

6 130 000 000 .112C312 640 640

* 95 000 000 .112C2119 16 000

60 000 000 .112C16* 200 000

16*2*91


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M,,

M,, 9 : /

M,, 9 /#0/ 1

M,, 9 9 #08


14/28

inancial Decision

ei&ion

ears


15/28

&53 vs ,,

&53 or ,,


16/28

&53 vs ,,

Mutually +clusive 5roHects

&53 more,, less

&53 less,, more

!ow to decide


17/28

&53 vs ,,

ind value o" IiJ8ro%et A;1000 000

G350 000:.1GiC1

G400 000:.1GiC2G500 000:.1GiC3

G650 000:.1GiC4

G*00 000:.1GiC5

8ro%et B;00 000

G 600 000:.1GiC1

G400 000:.1GiC2G300 000:.1GiC3

G200 000:.1GiC4

G200 000:.1GiC5

i 9 0?#/81 crossover $oint

:/ = >8 -(/=0?#/8)K/ = 9/; ?


18/28

&53 6 ,,

903,021

562,214

>1 @01

Crossover point

0?#/81

/;?


19/28

Bonus 2uestion

Seth Bullock(Owner)

o&t &rea&heet& onot ha$e built;in or"ulato alulate the a!bakerio

Irite a BA &rit thatalulate& the a!bakerio or a ro%et FF


20/28

Bonus 2uestion

5ay'ack $eriod 9 Amount invested +$ected annual cash in"low

7Nhen the $eriodic cash in"lows are une.ual I&et cash in"lowsJhave to 'e summed u$ until the amount invested in recovered#


21/28

3BA Scri$t

Function '?>@?CA(inest, Bno-

i ?s ou)e, ?s ou)e

i c ?s nte/er, i ?s nte/er

# ?s(inest

i # 1

c # Bno-.Count

o # !

# Bno-.Ce))s(i.a)ue

* # %en

'?>@?CA # i

Dit Function

D)se* = %en

' # i ! 1

E # "

'?>@?CA # ' ; E

Dit Function

Dnd *

i # i ; 1

oop Gnti) i c'?>@?CA # Hno payac


22/28

3BA Scri$t (cont*d)

Function '?>@?CA(inest, Bno-

i ?s ou)e, ?s ou)e

i c ?s nte/er, i ?s nte/er

# ?s(inest

i # 1

c # Bno-.Count

o # !

# Bno-.Ce))s(i.a)ue

* # %en

'?>@?CA # i

Dit Function

D)se* = %en

' # i ! 1

E # "

'?>@?CA # ' ; E

Dit Function

Dnd *

i # i ; 1

oop Gnti) i c'?>@?CA # Hno payac


23/28

Com$any Cash low

Year +a&h )lo,

0 ! $400,000,000

1 85,000,000

2 90,000,0003 140,000,000

4 180,000,000

5 195,000,000

6 130,000,0007 95,000,000

8 60,000,000

9 !95,000,000

4he total investment and cash "lows are as"ollowF


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3BA ,unning in Ms +cel


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Seth Bullock(Owner)

Dan Dority(Geologist)

Alma Garrett(CO)

4hank ou


26/28

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Back:P$ Slides


27/28

5ay'ack 5eriod

>ear Cas% outo- Cas% no- 'ayac<

0 !$400,000,000 !$400,000,000

1 $85,000,000 !$315,000,000

2 $90,000,000 !$225,000,000

3 $140,000,000 !$85,000,000

4 $180,000,000

5 $195,000,000

6 $130,000,000

7 $95,000,000 8 $60,000,000

9 !$95,000,000

85,000,000 " 180,000,000 # 0.47

'ayac< period # 3.47 years


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Discounted 5ay'ack 5eriod

>ear iscounted Cas% outo- iscounted Cas% no-'ayac<

0 !$400,000,000 !$400,000,000

1 $75,892,857!$324,107,143

2 $71,747,449!$252,359,694

3 $99,649,235 !$152,710,459

4 $114,393,254 !$38,317,205

5 $110,648,237

6 $65,862,046

7 $42,973,175

8 $24,232,994

9 !$34,257,952

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bullockgoldminingfinal-130418214838-phpapp02