RareEarth Mines is considering investing $1,200,000 in a mine that will produce $300,000

worth of ore in the first year. As the more accessible ore is removed it will become more

difficult to extract the ore. As a result, it is expected that the value of the ore mined will decline

at a rate of 6% per year forever. If the appropriate discount rate for valuing this investment is

10%, the net present value of this mining operation today is closest to:

a) $675,000.

b) $1,800,000.

c) $1,875,000.

d) $6,300,000.