You have been approached by the president of the company with a request to analyze the

project. Calculate the payback period, profitability index, net present value, and internal rate of

return for the new strip mine.

Should Bethesda Mining take the contract and open the mine?

In your decision making, consider the impact to your calculations:

(1) if the variable cost is +- $2 per ton – what is the worst case and best case scenario;

(2) you anticipate that the president will assume this project may be a high risk which

the company typically considers to have an impact of +3% of the required return.

Conduct analysis to address these conditions. Is the contract still a good choice? List any

assumptions you made to a complete your analysis.

Develop a PowerPoint presentation with any supporting documents to provide to the

president.