Highland Mining and Minerals Company is considering the purchase of two gold mines. Only one investment will be made. The Australian gold mine will cost $$1,621,000$ and will produce $$307,000$ per year in years $5$ through $15$ and $$570,000$ per year in years $16$ through $25.$ The U$.$S$.$ gold mine will cost $$2,086,000$ and will produce $$281,000$ per year for the next $25$ years. The cost of capital is $12$ percent. Use Appendix D for an approximate answer but calculate your final answers using the formula and financial calculator methods. $($Note: In looking up present value factors for this problem, you need to work with the concept of a deferred annuity for the Australian mine. The returns in years $5$ through $15$ actually represent $11$ years; the returns in years $16$ through $25$ represent $10$ years.$)$

a$-1.$ Calculate the net present value for each project.

Note: Do not round intermediate calculations and round your answers to $2$ decimal places.

a$-2.$ Which investment should be made?

multiple choice $1$

Australian mine

U$.$S$.$ mine

b$-1.$ Assume the Australian mine justifies an extra $4$ percent premium over the normal cost of capital because of its riskiness and relative uncertainty of cash flows. Calculate the new net present value given this assumption.

Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to $2$ decimal places.

b$-2.$ Does the new assumption change the investment decision?

multiple choice $2$

Yes

No