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Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled $ 5 . 8 million. After the silver is extracted in

Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled $5.8 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 company's controller has provided the following three cash flow possibilities for the restoration costs: (1) $520,000,20% probability; (2) $570,000,35% probability; and (3) $670,000,45% probability. The company's credit-adjusted, risk-free rate. of interest is 6%.
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