Montana Mining Co. (MMC) paid $200 million for the right to explore and extract rare metals from land owned by the state of Montana. To obtain the rights, MMC agreed to restore the land to a suitable condition for other uses after its exploration and extraction activities. MMC incurred exploration and development costs of $60 million on the project. MMC has a credit-adjusted risk free interest rate is 7%. It estimates the possible cash flows for restoring the land, three years after its extraction activities begin, as follows: (PV of $1, PVA of $1) (Use appropriate factor(s) from the tables provided.) Cash Outflow Probability $26 million 30% $78 million 70% The asset retirement obligation (rounded) that should be recognized by MMC at the beginning of the extraction activities is: Multiple Choice $50.9 million. $66 million. $44.4 million. $54 million. TABLE 2 Present Value of $1 $1 PV = (1 + i)" i 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% % 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 20.0% 1 0.99010 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.95694 0.95238 0.94787 0.94340 0.93458 0.92593 0.91743 0.90909090090 0.89286 0.83333 2 0.98030 0.97066 0.96117 0.95181 0.95181 0.94260 0.93351 0.93351 0.92456 0.91573 0.90703 0.89845 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.69444 3 0.97059 0.95632 0.94232 0.92860 0.91514 0.90194 0.88900 0.88900 0.87630 0.86384 0.87630 0.86384 0.85161 0.83962 0.81630 0.79383 0.77218 0.75131 0.73119 0.71178 0.57870 4 0.96098 0.94218 0.92385 0.90595 0.88849 0.87144 0.85480 0.83856 0.82270 0.80722 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.48225 5 0.95147 0.92826 0.90573 0.88385 0.88385 0.86261 0.84197 0.82193 0.80245 0.78353 0.76513 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.40188 6 6 0.94205 0.91454 0.88797 0.86230 0.83748 0.81350 0.79031 0.76790 0.74622 0.72525 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.33490 7 0.93272 0.90103 0.87056 0.84127 0.81309 0.78599 0.75992 0.73483 0.71068 0.68744 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.27908 8 0.92348 0.88771 0.85349 0.82075 0.78941 0.75941 0.73069 0.70319 0.67684 0.65160 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.23257 9 0.91434 0.87459 0.83676 0.80073 0.76642 0.73373 0.70259 0.67290 0.64461 0.61763 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.19381 10 0.90529 0.86167 0.82035 0.78120 0.74409 0.70892 0.67556 0.64393 0.61391 0.58543 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.16151 11 0.89632 0.84893 0.80426 0.76214 0.72242 0.68495 0.64958 0.64958 0.61620 0.58468 0.55491 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 0.13459 12 0.88745 0.83639 0.78849 0.78849 0.74356 0.70138 0.66178 0.62460 0.58966 0.55684 0.52598 0.49697 0.44401 0.39711 0.35553 0.31863 0.28584 0.25668 0.11216 13 0.87866 0.82403 0.77303 0.72542 0.68095 0.63940 0.60057 0.56427 0.53032 0.49856 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.09346 14 0.86996 0.81185 0.75788 0.70773 0.66112 0.61778 0.57748 0.53997 0.50507 0.47257 0.44230 0.38782 0.34046 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.07789 15 0.86135 0.79985 0.74301 0.69047 0.64186 0.59689 0.55526 0.51672 0.48102 0.44793 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.06491 16 0.85282 0.78803 0.72845 0.67362 0.62317 0.57671 0.53391 0.49447 0.45811 0.42458 0.39365 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.18829 0.16312 0.05409 17 0.84438 0.77639 0.71416 0.65720 0.60502 0.55720 0.51337 0.47318 0.43630 0.40245 0.37136 0.31657 0.27027 0.23107 0.19784 0.16963 0.14564 0.04507 18 0.83602 0.76491 0.70016 0.64117 0.58739 0.53836 0.49363 0.45280 0.41552 0.38147 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.03756 19 0.82774 0.75361 0.68643 0.62553 0.57029 0.52016 0.47464 0.43330 0.39573 0.36158 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 0.03130 20 0.81954 0.74247 0.67297 0.67297 0.61027 0.55368 0.50257 0.45639 0.41464 0.37689 0.34273 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.02608 21 0.81143 0.73150 0.65978 0.59539 0.53755 0.48557 0.43883 0.39679 0.35894 0.32486 0.29416 0.24151 0.19866 0.16370 0.13513 0.11174 0.09256 0.02174 24 0.78757 0.69954 0.62172 0.55288 0.49193 0.55288 0.49193 0.43796 0.39012 0.34770 0.31007 0.27666 0.24698 0.19715 0.15770 0.12640 0.10153 0.08170 0.06588 0.01258 25 0.77977 0.68921 0.609530.53939 0.47761 0.42315 0.37512 0.33273 0.29530 0.26223 0.233000.18425 0.14602 0.11597 0.09230 0.07361 0.05882 0.01048 28 0.75684 0.65910 0.57437 0.50088 0.43708 0.38165 0.33348 0.29157 0.25509 0.22332 0.19563 0.15040 0.11591 0.08955 0.06934 0.05382 0.04187 0.00607 29 0.74934 0.64936 0.56311 0.48866 0.42435 0.36875 0.32065 0.27902 0.24295 0.21168 0.18456 0.14056 0.10733 0.08215 0.06304 0.04849 0.03738 0.00506 30 0.74192 0.63976 0.55207 0.47674 0.41199 0.35628 0.30832 0.26700 0.23138 0.20064 0.17411 0.13137 0.09938 0.07537 0.05731 0.04368 0.03338 0.00421 31 0.73458 0.63031 0.54125 0.46511 0.39999 0.34423 0.29646 0.25550 0.22036 0.19018 0.16425 0.12277 0.12277 0.09202 0.06915 0.05210 0.03935 0.02980 0.00351 40 0.67165 0.55126 0.45289 0.37243 0.30656 0.37243 0.30656 0.25257 0.25257 0.208290.17193 0.14205 0.11746 0.09722 0.06678 0.04603 0.03184 0.02209 0.01538 0.01075 0.00068 TABLE 4 Present Value of an Ordinary Annuity of $1 1-1 (1+1) PVA = i 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5,0% 5.5% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 20.0% 1 0.99010 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.95694 0.95238 0.94787 0.94340 0.93458 0.92593 2 1.97040 1.95588 1.94156 1.92742 1.89969 1.88609 1.87267 1.85941 1.84632 1.83339 1.80802 1.78326 1.91347 2.82861 3 2.94099 291220 2.88388 2.85602 2.80164 2.77509 2.74896 2.72325 2.69793 2.67301 2.62432 2.57710 0.91743 0.90909 0.90090 0.89286 0.83333 1.75911 1.73554 1.71252 1.71252 1.69005 1.52778 2.53129 2.48685 2.44371 2.44371 2.40183 2.10648 3.239723.16987 3.10245 3.03735 2.58873 3.88965 3.79079 3.69590 3.60478 2.99061 4 3.90197 3.85438 3.80773 3.76197 3.71710 3.67308 3.62990 3.58753 3.54595 3.50515 3.46511 3.38721 3.31213 S 4.85343 4.78264 4.71346 4.64583 4.57971 4.51505 4.45182 4.38998 4.32948 4.27028 4.21236 4.10020 3.99271 6 5.79548 5.69719 5.60143 5.50813 5.41719 5.32855 5.24214 5.15787 5.07569 4.99553 4.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.32551 7 6.72819 6.59821 6.47199 6.34939 6.23028 6.11454 6.00205 5.89270 5.78637 5.68297 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 3.60459 5.53482 5.33493 5.14612 4.96764 3.83716 8 7.65168 7.48593 7.32548 7.17014 7.01969 6.87396 6.73274 6.59589 6.46321 6.33457 6.20979 5.97130 5.74664 9 8.56602 8.16224 7.60769 7.43533 7.26879 6.95220 6.80169 6.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.03097 8.36052 9.22218 7.97087 8.75206 7.78611 8.53020 7.10782 7.72173 10 9.47130 8.98259 8.31661 8.11090 7.91272 7.53763 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022 4.19247 7.88687 7.49867 7.13896 8.38384 7.94269 7.53608 11 10.36763 10.07112 9.78685 9.51421 9.25262 9.00155 8.76048 8.52892 8.30641 8.09254 12 11.25508 10.90751 10.57534 10.25776 9.95400 9.66333 9.38507 9.11858 8.86325 8.61852 13 12.13374 11.73153 11.34837 10.98319 10.63496 10.63496 10.30274 9.98565 9.68285 9.39357 9.11708 14 13.00370 12.54338 12.10625 11.69091 11.29607 10.92052 10.56312 10.22283 9.89864 9.58965 15 13.86505 13.34323 12.84926 12.38138 11.93794 11.51741 11.11839 10.73955 10.37966 10.03758 6.80519 6.49506 6.20652 5.93770 4.32706 7.16073 6.81369 6.49236 6.19437 4.43922 7.48690 7.10336 6.74987 6.42355 4.53268 7.78615 7.36669 6.98187 6.62817 4.61057 8.85268 8.35765 7.90378 9.29498 8.74547 8.24424 9.71225 9.10791 8.55948 8.06069 7.60608 7.60608 7.19087 6.81086 4.67547 8.85137 8.31256 7.82371 7.37916 6.97399 4.72956 9.12164 16 14.71787 14.13126 13.57771 13.05500 12.56110 12.09412 11.65230 11.65230 11.23402 10.83777 10.46216 10.10590 9.44665 17 15.56225 14.90765 14.29187 13.71220 13.16612 12.65132 12.16567 11.70719 11.27407 10.86461 10.47726 9.76322 18 16.39827 15.67256 14.99203 14.35336 13.75351 13.18968 12.65930 12.15999 11.68959 11.24607 10.82760 10.05909 1917.22601 16.42617 15.67846 14.97889 14.32380 13.70984 13.13394 12.59329 12.59329 12.08532 11.60765 12.08532 11.60765 11.15812 10.33560 2018.04555 17.16864 16.35143 15.58916 14.87747 14.21240 13.59033 13.00794 12.46221 11.95038 11.46992 10.59401 9.37189 8.54363 8.02155 7.54879 7.11963 4.77463 8.75563 8.20141 7.701627.24967 4.81219 8.95011 8.36492 7.839297.36578 4.84350 9.12855 8.51356 7.96333 7.46944 4.86958 9.60360 9.81815 21 18.85698 17.90014 25 22.02316 20.71961 30 25.80771 24.01584 17.01121 16.18455 15.41502 14.69797 14.02916 13.40472 12.82115 12.27524 11.76408 10.83553 10.01680 9.29224 8.64869 8.07507 7.56200 4.89132 19.52346 18.42438 17.41315 16.48151 15.62208 14.82821 14.09394 13.41393 12.78336 11.65358 10.67478 9.82258 9.07704 8.42174 7.84314 4.94759 22 39646 20.93029 19.60044 18.39205 17.29203 16.28889 15.37245 14.53375 13.76483 12.40904 11.25778 10.27365 10.27365 9.42691 8.69379 8.05518 4.97894 27.35548 25.10278 25.10278 23.11477 21.35507 19.79277 18.40158 17.15909 16.04612 15.04630 13.33171 11.92461 10.75736 9.77905 8.95105 8.24378 4.99660 40 32.83469 29.91585