3.12 A mining company has signed a contract for the development of a mine. The project involves a construction contract for $400 million, payable in eight equal instalments of $30 million payable quarterly in advance over the next two years with a final payment of $160 million on completion of the construction phase in two years' time. Mining will then commence and is expected to generate net revenue at the rate of $100 million per annum, increasing continuously from the start of mining at the rate of 3% per annum effective. The mine has an expected life of 25 years after which the cash flow is expected to cease. To provide for site rehabilitation the company is required to pay a fixed amount of $2 million per month in advance into a government trust fund from the date construction commences until mining ceases. Calculate (a) the net present value of the project at 8% per annum effective, (b) the payback period, (c) the discounted payback period at a borrowing rate of 8% per annum effective, (d) the internal rate of return and (e) assuming the company can invest surplus funds at 5% per annum, the accumulated value of the project when mining ceases