Computing Fair Value of Environmental Liability

Minerals Inc. anticipates environmental costs at the end of a $10-$year production cycle. Due to the uncertainties of the remedies available in $10$ years, the company has developed the following estimates.

In answering the following questions, round your answers to the nearest whole number, using no negative signs.

a$.$ Compute the expected cash outflow for the environmental costs.

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b$.$ Determine the fair value of the liability for environment costs assuming a risk$-$free interest rate of $5\%.$ $

Apply the expected cash flow technique, discounting cash flows using a risk$-$free rate.