Problem Algo Net Present Value Analysis LO
Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the
company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would
be associated with opening and operating a mine in the area:
Receipts from sales of ore, less outofpocket costs for salaries, utilities, insurance, and so forth.
The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for
reinvestment elsewhere. The company's required rate of return is
Click here to view Exhibit B and Exhibit B to determine the appropriate discount factors using tables.
Required:
a What is the net present value of the proposed mining project?
b Should the project be accepted?
Complete this question by entering your answers in the tabs below.
Required A
What is the net present value of the proposed mining project? Enter negative amount with a minus sign. Round your final
answer to the nearest whole dollar amount.
Net present value
