On May 1, 2013, Hecala Mining entered into an agreement with the state of New Mexico to obtain the rights to operate a mineral mine in New Mexico for $9.7 million. Additional costs and purchases included the following (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):

Development costs in preparing the mine	$	2,900,000
Mining machinery		157,300
Construction of various structures on site		53,900

After the minerals are removed from the mine, the machinery will be sold for an estimated residual value of $11,000. The structures will be torn down.

Geologists estimate that 770,000 tons of ore can be extracted from the mine. After the ore is removed the land will revert back to the state of New Mexico.

The contract with the state requires Hecala to restore the land to its original condition after mining operations are completed in approximately four years. Management has provided the following possible outflows for the restoration costs:

Cash Outflow			Probability
$	570,000			30	%
	670,000			40	%
	770,000			30	%

Hecala