12-16 (Algo) Net Present Value Analysis [LO12-2] 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: Cost of new equipment and timbers Working capital required Annual net cash receipts Cost to construct new roads in three years Salvage value of equipment in four years $ 390,000 $ 125,000 $ 140,000* $ 45,000 $ 70,000 *Receipts from sales of ore, less out-of-pocket 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 21%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted? EXHIBIT 128-1 Present Valur of St. Periods 2 5% 6% 4% 0962 0.952 0943 0.925 0907 0890 0.839 0.564 12% 13% 14% 0.885 0.783 4 $ 0790 0.746 0.666 7 0.760 0.711 N " 10 11 12 13 14 15 16 17 IN 0494 0.416 0.350 0.206 0.250 19 0.475 0.396 0331 0277 0.232 20 0.456 0.377 0312 0.258 0.215 21 22 0.359 0.294 0.242 0.419 0422 0342 0.278 0.226 0.184 0.199 23 0406 0.326 0211 0.170 0262 24 0.390 0310 0247 25 0375 0.295 26 0361 0.066 0.053 0.335 0.106 0.084 0281 23% 21% 2016 22% 10% 11% 9% 8% 7% 0826 0820 0813 0.8306 0840 0x31 0877 0.870 | 0.862 0.855 0.347 0.935 0.926 0.917 0909 0.901 0.893 0.769 0.756 0.743 0731 0.718 0.7060694 0.483 0.672 0.661 0.650 0640 0.524 0512 0.873 0.857 0.842 0.826 0812 0.797 0675 0658 0.641 0.624 0.600 0.593 0.579 0.564 0.551 0.537 8.816 0794 0.772 0.751 0.731 0.712 0.693) 0467 0.417 0.840 0451 0499 0,482 0.613 0.592 0683 0659 0.636 0572 0.552 0.534 0516 0.735 0.70k 0.763 0386 0.370 0355 0.855 0823 0.792 0650 0.621 0593 0.567 0.543 0.519 0.497 0.476 0.456 0437 0419 0.402 0822 0784 0,747 0.713 068 0507 0456 0.190 0.370 0.352 0335 0319 0.303 0.480 0412 0410) 0.705 0630 0.596 0.564 0.335 0.333 0314 026 0279 0.263 0.249 0482 0.452 6425 0.400 0376 0.154 06650623 0.583 0.547 0.513 0.285 0.266 0.249 6233 0.540 0.502 0467 0434 0.404 0376 0.351 0.327 0305 0.180 0731 0677 0627 0583 0.209 0.194 0191 0361 0333 0308 0.284 0.263 0.243 0.225 0.703 0645 0.592 0.544 0.500 0.460 0.424 0.149 0.422 0.386 0.352 0.322 0.295 0270 0.247 0.227 0.208 0191 0.176 0.162 0676 0614 0358 0.50 0.463 0.162 0148 0.135 0125 0.195 0376 0317 0261 0.237 0215 0.287 0650 0.585 0.527 0475 0.429 0.358 0.350 0092 0.08) 0.076 0009 6148 0.152 0.137 0.112 0102 0.124 0625 0.557 0.497 0.444 0397 0356 0319 0286 0.257 0231 0.208 0.187 0.093 0.084 0.075 0.068 0.0610055 0326 0.200 0258 0229 0.204 0.182 0.163 0.145 0130 0116 0.104 0.044 0601 6530 0469 0415 0368 0.078 0069 0.062 0.055 0.049 0.299 0.26) 0232 0205 0181 0.160 0141 0.125 0.1110009 0377 0.505 0442 0.388 0.340 0.095 0.084 0.074 0.065 0.057 0.051 0.045 0040 0015 0555 0481 0417 0.362 0315 0.275 0.219 0.209 0183 0160 0.140 0123 0.108 0.093 0.041 0.071 0.054 0.047 0.042 0.016 0.032 0.028 6062 0458 0339 0.292 0.252 0.218 0.188 0.163 0.141 0123 0.107 0.534 0394 0.045 0.019 0.016 0.026 002) 0.052 0.054 BOND 00096060 6231 0.198 0.170 0.146 0.125 0.108 0.093 0513 0436 0371 0317 6270 0.028 0.024 0.018 0.012 0.044 0.018 0.001 0311 0.069 0.059 0.051 0.095 0.08E 0212 0180 0.153 6.130 0.083 0.070 0060 0.051 0.043 0.037 0.031 0.027 0.025 0.020 6017 0014 0.164 0138 0.116 0.098 0.194 0.061 0.051 0.043 0.037 0.087 0.073 0.031 0.026 0.002 0.019 0016 0014 0.012 0.178 0.149 0.124 0.104 0.031 0.037 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.093 0.077 0.064 0.053 0.044 0.164 0.135 0.112 0013 0.011 0.009 0.007 0.015 0.012 0.022 0.018 0.026 0.046 0.038 0.083 0.068 0.056 0.150 0.423 0.301 0.007 0.006 0033 0.027 0.022 0.018 0.015 0.012 0.010 0.009 0.049 0.040 0.074 0.060 0.138 0112 0.091 0.007 0.006 0.005 0.023 6.010 0.008 0.019 0.015 0.013 0.043 0.035 0.082 0.053 0066 0197 0158 6126 0.102 0030 0.047 0038 0.010 0.020 0.016 0.013 0233 0.184 0.146 0.116 0.092 0.074 0.059 0042 0.033 0.017 0.014 0.011 0.009 0220 0.172 15% 16% 17% 18% 19% 24% 25% 0.800 0423 0410 0341 0328 0.289 0.275 0.262 0.235 0.222 0.210 0218 0.204 0.191 0.179 0.16K 0167 6.155 0.144 0.134 0.137 0.126 0.116 0107 0112 0.105 0.094 0.066 0.028 0.024 0.026 0.021 0.009 0.007 0.007 0.006 0.006 0.005 0.004 0.005 0.004 0.003 27 0347 0.268 28 0333 0.255 29 0321 0.243 0.185) 30 0308 0231 0124 0.207 0.161 0.125 0.098 0.076 0.060 0.047 0.196 0.150 0116 0.090 0.069 0.054 0141 0.045 6107 0.082 0.063 0.131 0.099 0.075 0.057 0.037 0.029. 0.023 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.042 0.037 6.033 0.026 0.029 0.022 0020 0.016 0.012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.007 6.005 0.004 0.00) 0.003 0.002 0.002 0.001 Present Value of an Annuity of $1 in Arrears, 11-411+) Periods 1 8% 4% 0.962 0.952 2 1.886 1.859 6% 7% 8% 0943) 0.935 0.926 1.833 1808 1.783 3 2.775 2.723 2673 2.624 2.577 4 1.630 3346 3.465 3.387 3.312 5 4.452 4.329 4.212 4.100 3.993 3.890 6 5.242 5076 4.917 3.889 7 6.002 5.786 5.582 4.288 N 6.733 6463 6210 9 7435 7.108 6.802 10 " 8.760 8306 12 13 111 7.722 7.360 7887 8.384 9.385 8863 9.966 9.394 N.853 14 10 563 9899 15 16 17 IN 19 20 13.590 12-462 11.470 10.594 9.818 21 14.029 12.821 11.764 10.836 10.017 22 14.451 13.163 12.042 11.061 10.201 23 24 25 9.077 26 27 28 29 30 40 22% 23% 21% 14% 17% 15% 18% 20% 16% 19% 12% 13% 10% 11% 9% 0.855 0.847 0.840 0333 0.826 0.820 0813 0.306 0.300 0.917 0.909 6.901 0.893 0.885 0877 0.870 0.862 1492 1474 1457 1440 1.585 1.647 1.626 1605 1.566 1.547 1.528 1.509 1,759 1.736 1.713 1.000 1.668 2.042 2011 1981 1952 2444 2.402 2361 2322 2.283 2.246 2210 2.174 2.140 2.106 2074 2.531 2487 3.240 3.170 3.102 3.037 2.974 2914 2.855 2.798 2.743 2.690 2639 2.589 2.540 2.494 2.448 2.404 2.362 2689 2.991 2.864 2.926 2.803 2.745 3.274 3.199 3.127 3.058 3.791 3.696 3.605 3517 5.092 3.020 2.951 3.998 3.685 3.589 3.498 3410 | 3326 3.245 3.167 4.355 4.231 4.111 4.486 4.767 4.623 3.605 3.922 3.812 3.706 3.508 3416 3.327 3.242 3.161 4.039 5.033 4.868 4.712 4.564 4.423 5.389 5.206 3.954 3.837 3.726 3.619 3518 4.344 4.207 4.078 5.747 5971 5.535 5.335 5.146 4.968 4.799 4.639 4.031 3.566 3463 4451 4.303 4.163 3.905 3.786 1.673 6515 6.247 5.995 5.759 5537 5.328 5.132 4.946 4.772 4.607 3.571 4.054 3.925 3.799 3682 4.494 4319 4.192 5.216 4.659 5.650 5426 5019 4833 7.024 6710 6418 6.145 5889 4.486 4.327 3902 3.776 3656 4.177 4015 5.687 5.453 5.234 5.029 4.836 4656 7.499 7.130 6.805 6.495 6.207 5938 4.439 4278 4611 4.127 3.851 3.985 3.725 7.536 7.161 6.814 6.492 6.194 5.918 5.660 5421 5.197 4.98K 4.793 4053 7.943 3.912 3.780 4.715 4533 4.362 4.203 5.842 5.583 5.342 5.118 4.910 7.487 7.103 6750 6.424 6.122 .358 7904 5.229 5.008 4302 6.002 5.724 5.468 4.611 4432 4265 4.10 3.962) 9.295 745 8.244 7.786 7.367 6982 6628 6.302 4.001 4.376 4.489 4.675 4.315 4.153 9.712 9.108 8.559 R.061 7.606 7.191 6811 6462 6142 5.847 5575 5324 5092 11.118 10.380 4.109 5.162 4.730 4.536 4357 4.938 8.313 7.824 7.379 6974 6604 6.265 5.954 5.668 5.405 11.652 10.338 10.106 9447 KS1 4219 4.059 3.910 6373 6047 5.749 5475 5222 4.990 4.775 4.576 4.391 12.166 11.274 10.477 9.763 9.122 544 022 7.549 7.120 6.729 5.033 4812 4.608 4419 4.243 4080 3.928 6467 6.128 5818 5.554 5.273 8.756 K201 7.702 7.250 6.840 4.635 4.442 4263 4.097 12.659 11.690 10.828 10.059 9.372 3942 8.950 365 7339 7.366 6938 6.550 6.198 5.877 5.584 5316 5.070 4.843 4.460 3.954 13.134 12.085S 11.158 10.336 9.604 4.279 4.110 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 9.129 8.514 7963 7469 5.384 5.127 4.391 4.675 4476 4.292 4.121 3963 9.292 8649 8.075 7.562 7.102 6687 6.312 5.973 5.665 4.302 4.130 3.970 4.488 4.909 4.690 5.696 5410 5.149 7.170 6.743 6.359 6011 9.442 8.772 8.176 7.645 4.137 4.499 4.311 3.976 6.044 5.723 5432 5.167 4.925 4.703 8.266 7.718 7.230 6.792 6.399 14.857 13.489 12.303 11.272 10.371 9.580 8883 K348 7.784 7.283 6.835 6.434 6.073 5.746 5451 5182 4.937 4.713 4.507 4,318 4.143 3.981) 4.721 4.514 4323 4147 39K5 15.247 13.799 12.550 11.469 10.529 9.707 8.985 5.195 4.948 8.422 7.843 7.330 6.873 6464 6.097 5.766 5.467 4.151 1988 15.622 14.094 12.783 11.654 10.675 9.823 4956 4.728 4.520 | 4328 9.161 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 15.9K3 14.375 13.003 11.826 10.810 9.929 4528 4.335 4.157 3.992 16.330 14.643 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7.409 6.935 6.514 6.136 5.795 5492 5215 4.964 4.734 4.524 4332 4.154 3.990 7.984 7441 6.961 6534 6152 5.810 5.502 5.223 4.970 4.739 4.743 4.331 4337 4 159 3.994 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 8.022 7.470 6.983 6.551 6.166 5.820 5510 5.229 4.975 4979 16.984 15.141 13.591 12.278 11.158 10.198 9370 8.650 4.746 4.534 4.339 4.160 3.995 8.055 7.496 7.003 6.566 6.177 5.329 5517 5.235 4.166 3.999 17.292 15.372 13.765 12.409 11.258 10.274 9427 8.694 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6642 6233 5871 5.548 5.258 4.997 4.760 4544 4347 24% 25% 3.433 3.352 3.784 4.160 4.4K 3421 1.329 3834 3.859 4.013 3.MK7