Deep Mines Ltd$.$ of Saskatchewan is contemplating the purchase of equipment to exploit a mineral deposit located 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 assoclated with opening and operating a mine in the area:

$10$ points

cost of new equipment and timbers

working capital required

Net annual cash receipts

cost to construct new roads in three years

Salvage value of equipment in four years

$$200,00075,00090,00030,00050,000$

"Recelpts from sales of ore, less out$-$of$-$pocket costs for salarles, utilitles, Insurance and so forth.

It is estimated that 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 discount rate is $20\%.$

Click here to view Exhibit $10-1$ and Exhibit $10-2,$ to determine the appropriate discount factor$($s$)$ using tables.

Requlred:

$1-$a$.$ Determine the NPV of the proposed mining project. $($Round dlscount factor$($s$)$ to $3$ declmal places. Round other Intermedlate calculations and final answer to the nearest whole number.$)$

Net present value

$1-$b$.$ Should the project be accepted?

Yes

No