Canada is among the 5 largest producers of diamonds in the world. The CFO at Optimax Inc., a company producing specialized lenses, is thinking about investing in a diamond mine that will produce $100,000 worth of ore per year for the first 5 years of exploitation. As the ore closest to the surface is removed it will become more difficult and costly to extract the ore. Therefore, after the first 5 years, the value of the ore that is extracted will decline at a rate of 7% per year forever. If the weighted average cost of capital of Optimax is 6%, then the value of this mining operation is:

Select one:

a. $955,813.38

b. $1,136,620.99

c. $634423.76

d. $869,756.15

e. $500,387.63