Ann: 2021 BFS Confirms Citronen as World Class Zinc Project, page-81

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Christos12

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20/07/21

15:12

Post #: 54633568
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Originally posted by Otgkb: ↑

Okay, it seems like you weren't trolling and actually don't understand the concept of NPV. I'll explain it to you nicely.

See on the BFS where it says 8% as a subscript to NPV? This indicates that the NPV was calculated with a discount rate of 8%. This is, in effect, the "required rate" of return assumed by the project. To put it in more understandable terms for you, if the ivestor decided, instead of investing in this zinc project, they would deposit $654m in the bank which was astoundingly, offering the investor a 8% interest rate. The NPV of this investment discounted at 8% would be $0. That's right, $0, because the 8% discount rate used to calculate the NPV directly cancels out with the interest the investor receives.

In other words, an NPV (at 8% discount) of $363m
represents the excess value the investor receives from the investment, compared to investing in the bank deposit at 8% interest. Do you see why it's a good investment now?

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No that isn't correct at all.
8% is the weighted average cost of capital, be that loans or equity. It includes the risk premium any investor would want to invest in a project with risks rather than risk-free investment.
it isn't a good investment.
please don't write so condescendingly when you don't even know what a WACC is and don't understand NPV quite as well as you think you do.

Last edited by Christos12: 20/07/21

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Ann: 2021 BFS Confirms Citronen as World Class Zinc Project, page-81

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