investment question?
The professor asked us whether we should recommend our clients to buy stocks in the following? how do you calculate if this mining company is worth buying stocks in? how do I calculate it in excel to show how I came up with my decision to my professor? I provide company information below? what numbers is important to look at how do i see if the company is worth investing based on these numbers. can explain how you calculate? what should i do! I have no idea! would you buy stocks in this company based on these numbers?
Canyon Resources Simulation
Construction Starts in Year2008
Years in Cash Flow12
Capital Costs$250,000,000
Total Output (Oz)4,900,000
Cash Operating Costs (Oz)$200
Gold Price$380
Debt Rate (%)50.00%
Interest Rate7.50%
Term (Yrs.)8
Loan PMT$21,340,878
Inflation Rate2.50%
State/Local Taxes (Oz)$17.00
Royalty Rate (%)5.00%
Federal Tax Rate (%)34.00%
Depletion Allowance50.00%
After Tax Cost of Capital17.50%
Pre-Tax Cost of Capital26.52%
Net Present Value$14,481,692
Internal Rate of Return20.41%
Pre-Tax Return30.93%
Appraised Value$389,481,692
Revenue
2009$155,166,667
2010$155,166,667
2011$155,166,667
2012$155,166,667
2013$155,166,667
2014$155,166,667
2015$155,166,667
2016$155,166,667
2017$155,166,667
2018$155,166,667
2019$155,166,667
2020$155,166,667
Expenses S&L Taxes
$81,666,667 $6,941,667
$83,708,333 $6,941,667
$85,801,042 $6,941,667
$87,946,068 $6,941,667
$90,144,719 $6,941,667
$92,398,337 $6,941,667
$94,708,296 $6,941,667
$97,076,003 $6,941,667
$99,502,903 $6,941,667
$101,990,476 $6,941,667
$104,540,238 $6,941,667
$107,153,744 $6,941,667
Balance
Prin. $125,000,000
$11,965,878 $113,034,122
$12,863,319 $100,170,803
$13,828,068 $86,342,736
$14,865,173 $71,477,563
$15,980,061 $55,497,502
$17,178,565 $38,318,937
$18,466,958 $19,851,979
$19,851,979 ($0)
DepreciationTaxable Income
$20,833,333 $28,591,667
$20,833,333 $27,447,441
$20,833,333 $26,319,481
$20,833,333 $25,211,560
$20,833,333 $24,127,797
$20,833,333 $23,072,683
$20,833,333 $22,051,117
$20,833,333 $21,068,432
$20,833,333 $20,130,430
$20,833,333 $17,642,857
$20,833,333 $15,093,096
$20,833,333 $12,479,590
Cash Flow
Fed. Taxes($125,000,000)
$4,860,583 $32,598,539
$4,666,065 $30,751,390
$4,474,312 $28,850,435
$4,285,965 $26,893,756
$4,101,725 $24,879,344
$3,922,356 $22,805,095
$3,748,690 $20,668,803
$3,581,633 $18,468,152
$3,422,173 $37,541,590
$2,999,286 $35,476,905
$2,565,826 $33,360,603
$2,121,530 $31,191,393
Looks like it would be great for a long term investment. Day traders & flippers might do ok but the long termers would do well.

Looks like it would be great for a long term investment. Day traders & flippers might do ok but the long termers would do well.
References :