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Question: Thomas wants to "make" money purchasing silver mine for $500,000. On the basis of estimated produ...

Show transcribed image text Thomas wants to "make" money purchasing silver mine for $500,000. On the basis of estimated production an annual cash flow (net profit after taxes + depreciation) of $95,000 is foreseen for the next 15 years. After 15 years, the mine will probably be worthless. (i) What annual DCF (discounted cash flow) rate of return i_DCF can Thomas expect from his investment? If the annual compound interest rate is 10%, what is the payout or payback period for Thomas's investment with the effect of interest considered?

Thomas wants to "make" money purchasing silver mine for $500,000. On the basis of estimated production an annual cash flow (net profit after taxes + depreciation) of $95,000 is foreseen for the next 15 years. After 15 years, the mine will probably be worthless. (i) What annual DCF (discounted cash flow) rate of return i_DCF can Thomas expect from his investment? If the annual compound interest rate is 10%, what is the payout or payback period for Thomas's investment with the effect of interest considered?