Highland Mining and Minerals Co. is considering the purchase of two gold mines. Only one investment will be made. The Australian gold mine will cost $1,609,000 and will produce $370,000 per year in years 5 through 15 and $538,000 per year in years 16 through 25. The U.S. gold mine will cost $2,032,000 and will produce $312,000 per year for the next 25 years. The cost of capital is 5 percent.

(a-1)

Calculate the net present value for each project. (Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Net present value

The Australian Mine

$

The U.S. Mine

$

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If the Australian Mine justifies an extra 3 percent premium over the normal cost of capital because of its riskiness and the relative uncertainty of cash flows, recalculate the net present value of the mine.(Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)

	Net present value
The Australian Mine	$