Simpson Mining is obligated to restore leased land to its original condition after its excavation activities are completed in three years The cash flow possibilities and probabilities for the restoration costs in 3 years are as follows Cash overflow Probability $ 111,000 20 161,000 40 211,000 40 The company's credit adjusted risk free interest rate is 4 The liability that Simpson must record at the beginning of the project for the restoration costs is (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 and round final answer to nearest whole dollar amount )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 01, 2024

Simpson Mining is obligated to restore leased land to its original condition after its excavation activities are completed in three years. The cash flow possibilities

Simpson Mining is obligated to restore leased land to its original condition after its excavation activities are completed in three years. The cash flow possibilities and probabilities for the restoration costs in 3 years are as follows:

Cash overflow		Probability
$	111,000	20	%
	161,000	40	%
	211,000	40	%

The company's credit-adjusted risk-free interest rate is 4%. The liability that Simpson must record at the beginning of the project for the restoration costs is (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 and round final answer to nearest whole dollar amount.):