1. Thompson Mining operates a silver mine in Nevada. Acquisition, exploration and development costs totaled $4.2 million. After the silver is extracted, Thompson has the obligation to restore the land and create a wildlife preserve. This is expected to be in 5 years. The company has the following three estimates for restoration costs: $500,000 (30% probability), $750,000 (40% probability), and $1,000,000 (30% probability). The company's credit-adjusted, risk-free rate of interest is 5%. Please show the computation of the initial cost of the silver mine. tion Exploration development cost en 4,200,000 tion costs 587644 cu T o gibsturisme i bo- = 1:9500,000 X 30% 150,000 .000.00 4,787,644 Any: 750,000 X 40. : 300,000 Tampa gnideix ni best 1,600,000 X 30% 300,000 2 to nousiqab berumu56 750,00 950 107 yine sho 1000 nes, i=5% Sistedalsbremmo as 6 PV= $587644 . Refer to Question 2 above. What is the book value of the Asset Retirement Obligation at the end of Year 1? Also, assuming the actual restoration costs are $800,000, what gain or loss will be recorded on the retirement of this liability? Asset Retirement obligation & 952dualsimmond