The Outback Mining Company has constructed a town at Big Bore, near the site of a rich mineral discovery in a remote part of Australia. The town will be abandoned when mining operations cease after an estimated 10-year period. The following estimates of investment costs, sales and operating expenses relate to a project to supply Big Bore with meat and agricultural produce over the 10-year period by developing nearby land: Investment in land is $1 million, farm buildings $200,000, and farm equipment $400,000. The land is expected to have a realizable value of $1 million in 10 years time. The salvage value of the buildings after 10 years is expected to be $50,000. The farm equipment has an estimated life of 10 years and a zero salvage value. An investment of $250,000 in current assets is required at startup. This working capital will be recovered at the termination of the venture. Annual cash sales are estimated to be $2.48 million. Annual cash operating costs are estimated to be $2.2 million. What is the NPV of the project, given that the required rate of return is 10% p.a.? The applicable tax rate is 30%. Note that investments in land and working capital are not depreciable. Assume that buildings and equipment are depreciable straight line over their useful lives. a. -$35.89m b. -$43.1m c. +56.78m d. + 49.22m

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