• Suppose a hypothetical lithium mining company, Northern Lithium, isconsidering building a lithium mine in Northern Quebec. To build the mine, Northern$2$Lithium needs to spend $$50$ million now and an additional $$50$ million at the end of each ofthe next two years. Once the mine is complete, it will start production in the third year for atotal of $8$ years, generating annual cash inflows of $$40$ million. However, during production,the company will incur $$5$ million annually in maintenance costs. At the end of the mine'slife $($the $10$th year$),$ Northern Lithium expects to spend another $$15$ million on environmentalrecovery efforts, a process known as reclamation. Northern Lithium determines that its costof capital $($discount rate$)$ is $15\%.$ Assuming all cash flows except the initial $$50$ million investment take place at the end of the period.

  a$.$ Calculate the present value of costs and the present value of benefits of the project, and determine the NPV of the project. Should Northern Lithium take on this project?

  b$.$ What if Northern Lithium could secure more favorable financing terms that reduce its cost of capital to $10\%?$ Should the company take on this project?