Introduction

Overview

Most major investment projects in the natural resource industry involve the economics of borrowed money. One can use a lever and fulcrum to get leverage to raise a heavy object such as a large rock, and business owners can borrow someone else’s money, and in addition to their own equity capital, leverage investment dollars to increase the profit that can be generated. In this lesson, we will learn how to handle the borrowed money in discounted cash flow rate of return analysis and net present value analysis of various types of geo-resource projects.

Learning Objectives

At the successful completion of this lesson, students should:

• be able to conduct a leveraged investment analysis;
• be familiar with joint venture analysis;
• be able to analyze a land investment with leverage; and
• understand the relationship between minimum rate of return and leverage.

What is due for Lesson 11?

This lesson will take us one week to complete. Please refer to the Course Syllabus for specific time frames and due dates. Specific directions for the assignment below can be found within this lesson.

Questions?

If you have any questions, please post them to our discussion forum, located under the Modules tab in Canvas. I will check that discussion forum daily to respond. While you are there, feel free to post your own responses if you, too, are able to help out a classmate.