MGT $ 1.00 TARGET PRICE 2024, page-256

As per chatGPT

To calculate the Net Present Value (NPV) of your project based on the PE (Price to Earnings) ratio, we need to estimate the future earnings of your project over the next 10 years. Here's how you can do it:

1. Estimate Annual Revenue:

   • Ironpeak's annual revenue can be calculated based on the quantity of iron ore mined and the selling price.
   • Iron ore quantity: 5 million tons per annum
   • Premium per ton: $150 (as opposed to $118 for 62% Fe)
   • Total annual revenue = Quantity * (Price per ton + Premium per ton)

2. Calculate Operating Costs:

   • Operating costs include expenses such as mining, processing, transportation, and administration.
   • You mentioned OPEX ranging from $46/ton to $55/ton.

3. Calculate Earnings Before Interest and Taxes (EBIT):

   • EBIT = Total annual revenue - Operating costs

4. Estimate Taxes:

   • Apply the corporate tax rate to the EBIT to find the tax expense.

5. Calculate Earnings After Taxes (EAT):

   • EAT = EBIT - Tax Expense

6. Estimate Dividends or Retained Earnings:

   • Decide whether you'll distribute dividends or reinvest earnings into the company.

7. Discount Earnings to Present Value:

   • Discount each year's earnings back to present value using a discount rate.
   • The discount rate should reflect the risk associated with the investment and the time value of money.
   • The PE ratio is used to determine the present value of future earnings. PE ratio = Price per Share / Earnings per Share

8. Determine the Stock Price:

   • Multiply the PE ratio by the estimated earnings per share to get the estimated stock price.

Let's proceed with these calculations step by step. We'll start with estimating annual revenue:

$\text{Annual Revenue}=\text{Quantity}\times (\text{Price per ton}+\text{Premium per ton})$

$\text{Annual Revenue}=5\text{million tons}\times (\$150/\text{ton}+\$118/\text{ton})$

$\text{Annual Revenue}=5\text{million tons}\times \$268/\text{ton}$

$\text{Annual Revenue}=\$1.34\text{billion}$

Now, let's calculate the earnings before interest and taxes (EBIT) using the operating cost range:

$\text{EBIT (best case)}=\text{Annual Revenue}-\text{OPEX (best case)}$

$\text{EBIT (best case)}=\$1.34\text{billion}-\$46/\text{ton}\times 5\text{million tons}$

$\text{EBIT (best case)}=\$1.34\text{billion}-\$230\text{million}$

$\text{EBIT (best case)}=\$1.11\text{billion}$

$\text{EBIT (worst case)}=\text{Annual Revenue}-\text{OPEX (worst case)}$

$\text{EBIT (worst case)}=\$1.34\text{billion}-\$55/\text{ton}\times 5\text{million tons}$

$\text{EBIT (worst case)}=\$1.34\text{billion}-\$275\text{million}$

$\text{EBIT (worst case)}=\$1.065\text{billion}$

Next, let's assume a corporate tax rate and calculate earnings after taxes (EAT). We'll also need to factor in potential dilution in shares due to partnership:

$\text{EAT}=\text{EBIT}\times (1-\text{Tax Rate})\times (1-\text{Dilution})$