Silverado Mining Company is analyzing the purchase of two silver mines. Only one investment will be made.

The Yukon mine will cost $$2$ million,

The Yukon Mine will produce $$400,000$ per year

in Years $5$ through $15$ and $$800,000$ per year in Years $16$ through $25.$

The Labrador mine

will cost $$2\mathrm{.}4$ million and will produce $$300,000$ per year for the next $25$ years.

The cost of capital is $10$ percent.

a$.$ Which investment should be made?

b$.$ If the Yukon mine justifies an extra $4$ percent premium over the normal cost of capital because of its

riskiness and relative uncertainty of flows, does the investment decision change?