Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled $7.5 million. After the silver is extracted in approximately five years, Smithson is obligated to restore the land to its original condition, including constructing a wildlife preserve. The companys controller has provided the following three cash flow possibilities for the restoration costs: (1) $690,000, 20% probability; (2) $740,000, 50% probability; and (3) $840,000, 30% probability. The companys credit-adjusted, risk-free rate of interest is 7%. (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.) What is the initial cost of the silver mine? (Enter your answers in whole dollars.)

Table or Calculator Function ____________

n= _____________

i = __________________ %

Restoration Costs ________________

Acquisition, Exploration and Development _______________

Initial Cost _____________