PROBLEM 7-16 Net Present Value Analysis LOT Windhoek Mines. Ltd. of Namibia, is contemplating the purchase of equipment to exploit a min- cral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: $275.000 Cost of new equipment and umbers Working capital required Annual net cash receipts Cost to construct new roads in three years Salvage value of equipment in four years $120.000 $40.000 * Receipts from sales of ore less out-of-pocket costs for salanes. utilitles, insurance and so forth The mineral deposit would be exhausted after four years of mining. At that point the working capital would be released for reinvestment elsewhere. The cotaxpany's required rate of return is 20%. Required: What is the net present value of the proposed mining project. Should the project be accepted? Explain