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Lombong Karun Sdn. Bhd. discovered a gold resource in Raub. The company secured a 10- year contract to mine the gold and the mining begins

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Lombong Karun Sdn. Bhd. discovered a gold resource in Raub. The company secured a 10- year contract to mine the gold and the mining begins immediately. Since the gold dust resource is expected to deplete and it is difficult to extract, the gold mining revenue is expected to decrease too. If the predicted revenue in years 1 through 4 is RM56,000 and then amounts will decrease by RM2800 per year through year 10, using an interest rate of 18% per year, (a) Draw and label the cash flow diagram of the 10-year gold mining contract. (5 marks) (b) Determine the present worth of the income in the 10-year contract. (10 marks) (c) If the company plan to collect the gold revenues only in year 5 and year 10, calculate the amount of revenues in both years 5 and 10 if the values are equal

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