Seth Bullock, the owner of ABC Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the companys geologist, has just finished his analysis of the mine site. He had estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the companys financial officer. Alma has been asked by Seth to perform an analysis of the new mine and present her recommendation on whether the company should open the new mine.

Alma has used the estimates provided by Dan to determine the revenues that could be expected from the mine. She also has projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $825 million today. The expected cash flows each year from the mine are shown in the following table. ABC Mining has a 12 percent required return on all of its gold mines.

Year Cash Flow

0 $825,000,000

1 160,000,000

2 185,000,000

3 215,000,000

4 245,000,000

5 210,000,000

6 205,000,000

7 190,000,000

8 160,000,000

• Calculate the break-even operating cash flow of the proposed mine.