Corporate Finance Minicase: Bullock Gold Mining, Chapter 9



Stephen A. Ross
Massachusetts Institute of Technology
Randolph W. Westerfi eld
University of Southern California
Bradford D. Jordan
University of Kentucky


Corporate Finance Minicase: Bullock Gold Mining, Chapter 9 : Net Present Value and Other Investment Criteria

Bullock Gold Mining

Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company’s geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined.

Dan has taken an estimate of the gold deposits to Alma Garrett, the company’s fi nancial offi cer. Alma has been asked by Seth to perform an analysis of the new mine and present her recommendation on whether the company should open the new mine. Alma has used the estimates provided by Dan to determine he revenues that could be expected from the mine. She has also projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $450 million today, and it will have a cash outfl ow of $95 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it. The expected cash fl ows each year from the mine are shown in the table. Bullock Mining has a 12 percent required return on all of its gold mines.


  1. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, and net present value of the proposed mine.
  2. Based on your analysis, should the company open the mine?
  3. Bonus question: Most spreadsheets do not have a built-in formula to calculate the payback period. Write a VBA script that calculates the payback period for a project.


1. Required Return (K) = 12%

A. Net Present Value (NPV) = – 450,000,000 + 63,000,000/(1+0,12)1 + 85.000,000/(1+0,12)2 + 120,000,000/(1+0,12)3 + 145,000,000/(1+0,12)4 + 175,000,000/(1+0,12)5  + 120,000,000/(1+0,12)6 + 95,000,000/(1+0,12)7 + 75,000,000/(1+0,12)8 + -70,000,000/(1+0,12)9 = 56,962,380.80

Diperoleh total nilai NPV sebesar $ 59.692.380,80. Nilai NPV bernilai positif. Artinya, jika perusahaan membuka tambang tersebut, maka perusahaan tidak mengalami kerugian.

B. Payback Periode (PP)

PP 1 = 450,000,000 – 63,000,000 = 387,000,000

PP 2 = 387,000,000 – 85,000,000 = 302,000,000

PP 3 = 302,000,000 – 120,000,000 = 182,000,000

PP 4 = 182,000,000 – 145,000,000 = 37,000,000

PP 5 = 37,000,000 – 175,000,000 = – 138,000,000

Berdasarkan data diatas, pada tahun ke- 5 menunjukkan hasil negatif. Artinya, terlihat bahwa perusahaan sudah mendapatkan pemasukan.

C. Internal Rate of Return (IRR)











D. Modified Internal Rate of Return (MIRR)


2. Analysis :

Dari hasil perhitungan diatas maka dapat disimpulkan bahwa perusahaan membuka tambang apabila diperoleh data sebagai berikut :

  1. Nilai NPV (Net Present Value) sebesar $ 59.692.380,80 (bernilai positif) yang berarti perusahaan tidak mengalami kerugian dan mengalami keuntungan sebesar $ 59.692.380,80.
  2. Berdasarkan nilai payback period terlihat bahwa perusahaan sudah mendapatkan pemasukkan pada tahun ke 5 atau memiliki tingkat pengembalian yang lebih cepat dari limit tahun ke 8. Yang berarti perusahaan tidak akan mengalami kerugian
  3. Nilai IRR (Tingkat pengembalian internal) dengan menggunakan nilai K baru sebesar 15,6671454% dapat menghasilkan nilai NPV = 0 sehingga keputusan yang diambil perusahaan untuk membuka tambang adalah aman dan tidak menimbulkan kerugian.

Dilihat sebanyak : 268 kali

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