(a) A mining firm makes annual deposits of $500,000 into a reclamation fund for 30 years. If the firm must have $20 million when the mine is closed, what interest rate must the investment earn?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
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Answer part (a) without excel 

(a) A mining firm makes annual deposits of $500,000
into a reclamation fund for 30 years. If the firm
must have $20 million when the mine is closed,
7-1
what interest rate must the investment earn?
(b) The $20 million above is to be used to reclaim the
negative impacts of the mine. List 6 to 10 potential
260 CHAPTER 7: RATE OF RETURN ANALYSIS
the stock was sold for $25,000. What was the rate of
return on the investment?
Transcribed Image Text:(a) A mining firm makes annual deposits of $500,000 into a reclamation fund for 30 years. If the firm must have $20 million when the mine is closed, 7-1 what interest rate must the investment earn? (b) The $20 million above is to be used to reclaim the negative impacts of the mine. List 6 to 10 potential 260 CHAPTER 7: RATE OF RETURN ANALYSIS the stock was sold for $25,000. What was the rate of return on the investment?
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