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Group Assignment#2Due date: Lecture 11 (November17th).(You are given three weeks to complete theassignment)Department of Economics andFinanceCB3410, FinancialManagementSemester A,2016/17, Dr. RyoonheeKimRead the following case carefully and answer the questions in thebottom.Showall the works you need to do to get final answer. Eachstep to obtain thefinalanswershouldbeshownorexplained(e.g.whyyouchoosetodoinsuchaway).An answer without explanationwill get 0 point. (Even if you submit an excelfile,You should submitone report per group and put all the names of yourgroupmemberson the report. The submission can be in a hard copy or a soft copyofyour answer. You should bring a hard copy to me in class or send asoft copybyemail to TA, Gobin Rana (rgobin@cityu.edu.hk) on orbefore the due datestatedabove. No late submission will beaccepted.Mini Case Study: Bethesda MiningCompanyBethesda Mining is a midsized coal mining company with 20 mineslocatedin Ohio, Pennsylvania, West Virginia, and Kentucky. Thecompany operatesdeepmines as well as strip mines. Most of thecoal mined is sold under contract,withexcess production sold on thespotmarket.The coal mining industry, especially high-sulfur coaloperations suchasBethesda, has been hard-hit by environmentalregulations. Recently, however,a combination of increased demandfor coal and new pollutionreductiontechnologies has led to animproved market demand for high-sulfurcoal.BethesdahasjustbeenapproachedbyMid-OhioElectricCompanywitharequestto supply coal for its electric generators for the nextfour years. BethesdaMiningdoes not have enough excess capacity atits existing mines to guaranteethecontract. The company isconsidering opening a strip mine in Ohio on5,000acres of landpurchased 10 years ago for $6 million. Based on a recentappraisal,the company feels it could receive $7 million on an aftertax basis if itsoldthelandtoday.Strip mining is a process where the layers of topsoil above acoal veinareremoved and the exposed coal is removed. Some timeago, the companywouldsimply remove the coal and leave the land inan unusable condition. Changesin mining regulations now force a
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