Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Coat of new equipment and timbers Working capital required Annual net cash receipta Cont to construct new roads in year three Salvage value of equipment in four years $ 460,000 $ 160,000 $ 175,000 $ 52,000 $77,000 "Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 18%. Click here to view Exhibit 128:1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted? nenecation.com/Media/Connect Production/bne/accounting/brewer_Be/exhibit_128_1.jpg DOMIDT 120-1 Present Value of Sta. 10% 11% 17 Penods 4% 5% 6% 7% 8% 92 12% B 14% 155 16% 19% 20% 1 0.962 0952 0943 0935 0926 0917 0909 0.901 0893 0.885 0877 0.870 0.862 0855 0847 08400833 0826 0820 081 0806 0800 213 24 25 2 0925 0907 0890 0.873 0857 0.842 0826 0.812 0797 0783 0.769 07560743 0731 0718 0706 0694 063 0672 0661 0650 0640 3 0889 0864 0840 0.816 0.794 0.772 0751 0.731 0712 0693 0675 0658 0.641 0624 06090593 0579 0564 0551 0537 0.524 0512 4 0855 0823 0792 0763 0735 0708 0683 0659 0636 0613 0.592 0572 0.552 0534 0516 0499 0482 0.467 0451 0.37 0.423 0410 0.822 0784 0747 0.713 0681 0.650 0621 0.593 0567 0543 0.519 0.497 0.476 0456 0.437 0.419 0.402 0.386 0370 0.355 0.341 0378 6 0790 0.746 0.705 0666 0630 0596 0564 0535 0507 0.480 0456 0432 0.410 0 390 0370 0352 0335 0319 0303 0289 0275 0262 7 0.750 0711 0665 0623 0583 0.547 0513 0482 0.452 0425 0.400 0376 0.354 0333 0.314 0296 0219 0263 0249 0235 0222 0210 8 0731 0677 0.627 0582 0540 0502 0467 0.434 0.404 0.376 0351 0327 0305 0285 0.266 0249 0233 0.218 0204 0191 0179 0168 9 0.703 0645 0592 0544 0.500 0.460 0424 0391 0361 0333 0308 0284 0263 0243 0225 0209 0194 0180 0167 0155 0144 0134 10 0.676 0614 0558 0508 0463 0.422 0386 0352 0322 0295 0270 0247 0227.0208 0191 0176 01620149 01370126 0116 0107 11 0650 0585 0527 0.475 0.429 0388 03500317 0287 0261 0237 02150195 0178 0162 0148 01350123 01120103 0094 0086 12 0.625 0557 0.497 0444 0397 0.356 0319 0286 0257 0231 0208 0187 0168 0152 0137 0124 0.112 0102 0092 0083 0.076 0069 13 0 601 0530 0469 0415 0368 0326 0290 0258 0229 0204 0182 0163 0145 01300116 0104 0093 0084 0075 0068 0061 0055 14 0577 0.505 0.442 0388 0340 0299 0263 0232 02050181 01600141 01250111 0099 0088 0078 0059 0062 0055 0049 0044 15 0.555 0.481 0.417 0362 0.315 0275 0.239 0209 0183 016001400123 0108 00950084 0074 0065 0057 0051 0.045 0040 0035 16 0.534 0458 0394 0339 0292 0252 021801880163 01410123 0107 0093 0081 0071 0.062 0054 0047 0042 0036 0032 0028 1 05130436 0.371 03170270 0231 0198 0170 0.14601250108 0093 0.080 0069 00600052 0045 0039 0.034 0030 0026 0023 18 0.494 0415 0350 0296 0250 0 212 01800153 0130 0711 0095 0.081 0069 0059 0051 0044 0038 0032 0028 0024 0021 0018 19 0.475 0396 0331 0277 0232 0194 0164 0138 0116 0.098 0083 0070 0.060 0.051 0043 0.037 0031 0027 0023 0.020 0.017004 20 0.456 0.377 0312 0258 02150178 0149 0124 0104 0087 0.073 0.061 0051 0.043 0037 0.031 0026 0022 0019 0.0% 0.014 0.012 23 0.439 0359 0294 0242 0199 0.161 013501120093 0077 0064 0.053 0044 0.037 0031 0,026 0022 0.018 0015 0.00 0011 0009 22 0422 0342 0278 0226 0184 015001230101 0083 0.068 0056 0.046 0038 0.032 0026 0.022 0018 0015 003 0011 00090001 23 0406 0326 0262 02110170 0138 0112 0091 00740060 0049 00400033 0027 0022 0018 0015 0012 000 0009 0.007 0006 24 0390 0310 0247 0197 0158 01260102 OOR2 006 0053 004 003 0028 0023 0019 0015 003 000 000 000 000 0005 25 0275 0295 0722 01840146 0116 009200% 0.059 0047 0038 00:30 0074 0020 001 000 000 0009 0.007 0006 0.005 0004 26 0 361 0281 0220 0172 0135010600R4 006 00510042 0033 0026_0021 0.017 0014 0011 0009 0.007 0.006 0005 0064 000 27 0347 0268 0207 0167 0175 0098 00760060047 0037 0079 0023 001 001400 0009 0007 0006 0005 0004 0003 000) 28 0333 0255 01960150 0116 0090 0069 0054 0042 0033 0026 0020 0015 0012 0010 000R 0006 0.005 0004 0003 0002 0.002 29 0321 0243 0185 0141 0307 0082 003 0048 0037 00290002 0017 OM 0011 000 000 0005 0004 00030002 0000 000) 30 0308 0.231 0174 0131 0.099 0075 0057 0044 003 0025 0020 0015 000 0009 0007 0005 0004 0003 0.003 0.002 0.002 0001 40 0208 012_0097 0067 0046 0032 0022 0015 0011 000 000 0004 0003 0002 000100010001 0000 0000 0000 0000 0000 -media.rheducation.com/Media/Connect Production/bne/accounting/brewer_Be/exhibit_128_2.jpg EXHIBIT 120-2 Present Value of an Annuity of S1 in Arrears 10% Periods 4% 5 6% 15 8% 9% 11% 123 13% 15% 16% 17% 18% 20% 213 2245 1 09620952 0943 0935 0926 0917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0855 0.847 0840 0833 0826 0820 0.813 0806 0800 24% 257 2 1.886 1859 1.833 1.808 1783 1759 1736 1713 1690 1668 1647 1626 1605 1585 1566 1547 1528 1509 1492 1474 1457 1440 3 2775 2723 2.673 2624 2577 2531 2487 2444 2402 2361 2322 2283 2246 2210 2174 210 2106 2074 2042 2011 1981 1952 4 3.630 3.546 3.465 3.387 3.312 32403170 3102 3037 2974 294 2855 2798 2743 2690 2639 2.589 2540 2494 248 2404 2352 4.452 4329 4.212 4.100 3993 3.890 391 3.696 3605 3.517 3433 3352 3274 3199 3127 3058 2991 2926 2864 2803 2745 2689 5.242 507649174767 4623 4486 4355 4231 4111 3 998 3889 3784 3685 3589 3498 3410 3.326 3245 3167 3092 3020 2951 7 6 002 5786 5582 5389 5.206 5.033 4868 4712 4564 4423 4288 4160 4039 3922 3.812 37063605 3.508 3.41 3.327 3242 3961 8 6.733 6.463 6.210 5971 5747 5535 5335 5.146 4.968 47994639 4487 4344 4207 4078 3 954 3.837 3726 3619 3518 3.421 3329 9 7.435 7.108 5.802 6.515 6 247 5995 5759 5.537 5.328 5132 49464772 4607 4451 4303 4163 4031 3.905 3.785 3.673 3.566 3.463 10 8111 7722 7360 7.024 6.710 6.418 6145 5889 5650 5.426 5216 5019 4833 4659 4494 4339 4192 4054 3323 3799 3682 3571 11 8760 8.306 7887 74997139 6.805 5.495 6 207 5938 5687 5453 5234 5,029 48364656 4486 4327 4177 4035 3902 3776 3656 12 9,385 8863 8,384 7943 7536 7161 6 814 6.492 6194 5.918 5.660 5.421 5197 4988 4793 4611 4439 4278 4127 3985 3.851 3725 13 9.986 9.394 8.853 8.358 7904 7487 7103 6750 6 424 6.122 5.642 5583 5.342 5118 4910 4715 4533 4362 4200 4053 3912 3780 10563 9.899 9.295 8745 8244 77867367 6982 5628 6 302 6002 5724 5.468 5229 5008 4802 46114432 4265 4.308 3962 3.824 15 11118 10 3809712 9108 8.559 8061 7606 7191 6.811 6462 6.142 5 847 5575 5324 5.092 4876 4675 4489 4315 4153 4001 3859 16 11652 10.838 10.106 9447 8.851 831378247379 6.914 5.604 62655954 5668 5 405 5162 4938 4730 4536 4357 419 4033 3887 17 12.166 11 274 10.477 9.763 8.544 8022 7549 2120 6.729 5373 6,047 5749 5.475 5222 4 990 4775 4576 491 429 4059 3910 12 659 11690 10.828 10.0599372 8.7568.201 7702 7250 6 840 6 467 6.128 5.818 5 534 5.273 5033 48124508 419 4243 4080 3.928 19 3:134 12.085 11158 10 33696048950 8365 7839 73666938 6550 6.198 5.877 5584 5316 5070 4843 4635 4442 4263 4097 3942 20 13590 1462 11 470 105949818 9 129 8514 7963 7469 7025 6623 6259 5929 5628 5353 5101 4870 4657 4450 4279 4103954 21 14029 12821 11764 10836 10.017 9.292 8649 80757562 7102 6687 6312 5973 5665 5384 5127 4891 46754475 4292 41213953 22 14451 13163 12.042 11061 10 201 9442 812 8175 7645 7170 6743 6359 6011 5696 540 5149 4909 4690 4488 4302 41303970 23 44857 13.489 12 303 11 272 10371 9580 883 8266 7718 7230 67926399 5044 5723 532 5167 4925 4703 4499 4.311 4373975 24 15 247 79912550 1146910529 97078 985 8348 7784 7283 6835 6434 6073 57465451 5182 4937 4 713 4507 438 483 3981 25 15 622 14.094 12783 1654 1067598239.077 84227843 7330 6872 6 464 6097 5766 5467 5195 4948 4721 454 4393 4173985 26 15.983 14 375 300311826 10.810 9.929 9161 8488 7896372 6,906 6.491 6118 5.78354805 206 4956 4728 4520 43284151 3988 27 16 330 14643 13 211 11987 10935 10.027 9237 548 7943 7409 693565166136 57985492 5 215 4964 4734 4524 4332 4150 3990 28 16 653 16 898 006 12.137 11.651 10.116 9307 8502 984 7441 6951 6534 6152 5810 5502 52234970 4739 45284335 4157992 29 16 98415141 3.591 12.278. 11158 10198 9370 8650 8022 7410 93 6551 6166 5820 5510 5229 4975 4743 4531 432 41543994 30 17292 15 372. 1765 12.409 11.258 10 274 9 427 8694 8055 749670036.566 6177 5.829 551 5275 4979 4746 4514 4339, 4150 1995 19.793 17159 15.046 13.332 11.925 757 9779 89518.244 1634 71056642 6233 5 871 5.548 5258 4997 47904544 434 4166 999 839 * = OWN 9122 Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Coat of new equipment and timbers Working capital required Annual net cash receipta Cont to construct new roads in year three Salvage value of equipment in four years $ 460,000 $ 160,000 $ 175,000 $ 52,000 $77,000 "Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 18%. Click here to view Exhibit 128:1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted? nenecation.com/Media/Connect Production/bne/accounting/brewer_Be/exhibit_128_1.jpg DOMIDT 120-1 Present Value of Sta. 10% 11% 17 Penods 4% 5% 6% 7% 8% 92 12% B 14% 155 16% 19% 20% 1 0.962 0952 0943 0935 0926 0917 0909 0.901 0893 0.885 0877 0.870 0.862 0855 0847 08400833 0826 0820 081 0806 0800 213 24 25 2 0925 0907 0890 0.873 0857 0.842 0826 0.812 0797 0783 0.769 07560743 0731 0718 0706 0694 063 0672 0661 0650 0640 3 0889 0864 0840 0.816 0.794 0.772 0751 0.731 0712 0693 0675 0658 0.641 0624 06090593 0579 0564 0551 0537 0.524 0512 4 0855 0823 0792 0763 0735 0708 0683 0659 0636 0613 0.592 0572 0.552 0534 0516 0499 0482 0.467 0451 0.37 0.423 0410 0.822 0784 0747 0.713 0681 0.650 0621 0.593 0567 0543 0.519 0.497 0.476 0456 0.437 0.419 0.402 0.386 0370 0.355 0.341 0378 6 0790 0.746 0.705 0666 0630 0596 0564 0535 0507 0.480 0456 0432 0.410 0 390 0370 0352 0335 0319 0303 0289 0275 0262 7 0.750 0711 0665 0623 0583 0.547 0513 0482 0.452 0425 0.400 0376 0.354 0333 0.314 0296 0219 0263 0249 0235 0222 0210 8 0731 0677 0.627 0582 0540 0502 0467 0.434 0.404 0.376 0351 0327 0305 0285 0.266 0249 0233 0.218 0204 0191 0179 0168 9 0.703 0645 0592 0544 0.500 0.460 0424 0391 0361 0333 0308 0284 0263 0243 0225 0209 0194 0180 0167 0155 0144 0134 10 0.676 0614 0558 0508 0463 0.422 0386 0352 0322 0295 0270 0247 0227.0208 0191 0176 01620149 01370126 0116 0107 11 0650 0585 0527 0.475 0.429 0388 03500317 0287 0261 0237 02150195 0178 0162 0148 01350123 01120103 0094 0086 12 0.625 0557 0.497 0444 0397 0.356 0319 0286 0257 0231 0208 0187 0168 0152 0137 0124 0.112 0102 0092 0083 0.076 0069 13 0 601 0530 0469 0415 0368 0326 0290 0258 0229 0204 0182 0163 0145 01300116 0104 0093 0084 0075 0068 0061 0055 14 0577 0.505 0.442 0388 0340 0299 0263 0232 02050181 01600141 01250111 0099 0088 0078 0059 0062 0055 0049 0044 15 0.555 0.481 0.417 0362 0.315 0275 0.239 0209 0183 016001400123 0108 00950084 0074 0065 0057 0051 0.045 0040 0035 16 0.534 0458 0394 0339 0292 0252 021801880163 01410123 0107 0093 0081 0071 0.062 0054 0047 0042 0036 0032 0028 1 05130436 0.371 03170270 0231 0198 0170 0.14601250108 0093 0.080 0069 00600052 0045 0039 0.034 0030 0026 0023 18 0.494 0415 0350 0296 0250 0 212 01800153 0130 0711 0095 0.081 0069 0059 0051 0044 0038 0032 0028 0024 0021 0018 19 0.475 0396 0331 0277 0232 0194 0164 0138 0116 0.098 0083 0070 0.060 0.051 0043 0.037 0031 0027 0023 0.020 0.017004 20 0.456 0.377 0312 0258 02150178 0149 0124 0104 0087 0.073 0.061 0051 0.043 0037 0.031 0026 0022 0019 0.0% 0.014 0.012 23 0.439 0359 0294 0242 0199 0.161 013501120093 0077 0064 0.053 0044 0.037 0031 0,026 0022 0.018 0015 0.00 0011 0009 22 0422 0342 0278 0226 0184 015001230101 0083 0.068 0056 0.046 0038 0.032 0026 0.022 0018 0015 003 0011 00090001 23 0406 0326 0262 02110170 0138 0112 0091 00740060 0049 00400033 0027 0022 0018 0015 0012 000 0009 0.007 0006 24 0390 0310 0247 0197 0158 01260102 OOR2 006 0053 004 003 0028 0023 0019 0015 003 000 000 000 000 0005 25 0275 0295 0722 01840146 0116 009200% 0.059 0047 0038 00:30 0074 0020 001 000 000 0009 0.007 0006 0.005 0004 26 0 361 0281 0220 0172 0135010600R4 006 00510042 0033 0026_0021 0.017 0014 0011 0009 0.007 0.006 0005 0064 000 27 0347 0268 0207 0167 0175 0098 00760060047 0037 0079 0023 001 001400 0009 0007 0006 0005 0004 0003 000) 28 0333 0255 01960150 0116 0090 0069 0054 0042 0033 0026 0020 0015 0012 0010 000R 0006 0.005 0004 0003 0002 0.002 29 0321 0243 0185 0141 0307 0082 003 0048 0037 00290002 0017 OM 0011 000 000 0005 0004 00030002 0000 000) 30 0308 0.231 0174 0131 0.099 0075 0057 0044 003 0025 0020 0015 000 0009 0007 0005 0004 0003 0.003 0.002 0.002 0001 40 0208 012_0097 0067 0046 0032 0022 0015 0011 000 000 0004 0003 0002 000100010001 0000 0000 0000 0000 0000 -media.rheducation.com/Media/Connect Production/bne/accounting/brewer_Be/exhibit_128_2.jpg EXHIBIT 120-2 Present Value of an Annuity of S1 in Arrears 10% Periods 4% 5 6% 15 8% 9% 11% 123 13% 15% 16% 17% 18% 20% 213 2245 1 09620952 0943 0935 0926 0917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0855 0.847 0840 0833 0826 0820 0.813 0806 0800 24% 257 2 1.886 1859 1.833 1.808 1783 1759 1736 1713 1690 1668 1647 1626 1605 1585 1566 1547 1528 1509 1492 1474 1457 1440 3 2775 2723 2.673 2624 2577 2531 2487 2444 2402 2361 2322 2283 2246 2210 2174 210 2106 2074 2042 2011 1981 1952 4 3.630 3.546 3.465 3.387 3.312 32403170 3102 3037 2974 294 2855 2798 2743 2690 2639 2.589 2540 2494 248 2404 2352 4.452 4329 4.212 4.100 3993 3.890 391 3.696 3605 3.517 3433 3352 3274 3199 3127 3058 2991 2926 2864 2803 2745 2689 5.242 507649174767 4623 4486 4355 4231 4111 3 998 3889 3784 3685 3589 3498 3410 3.326 3245 3167 3092 3020 2951 7 6 002 5786 5582 5389 5.206 5.033 4868 4712 4564 4423 4288 4160 4039 3922 3.812 37063605 3.508 3.41 3.327 3242 3961 8 6.733 6.463 6.210 5971 5747 5535 5335 5.146 4.968 47994639 4487 4344 4207 4078 3 954 3.837 3726 3619 3518 3.421 3329 9 7.435 7.108 5.802 6.515 6 247 5995 5759 5.537 5.328 5132 49464772 4607 4451 4303 4163 4031 3.905 3.785 3.673 3.566 3.463 10 8111 7722 7360 7.024 6.710 6.418 6145 5889 5650 5.426 5216 5019 4833 4659 4494 4339 4192 4054 3323 3799 3682 3571 11 8760 8.306 7887 74997139 6.805 5.495 6 207 5938 5687 5453 5234 5,029 48364656 4486 4327 4177 4035 3902 3776 3656 12 9,385 8863 8,384 7943 7536 7161 6 814 6.492 6194 5.918 5.660 5.421 5197 4988 4793 4611 4439 4278 4127 3985 3.851 3725 13 9.986 9.394 8.853 8.358 7904 7487 7103 6750 6 424 6.122 5.642 5583 5.342 5118 4910 4715 4533 4362 4200 4053 3912 3780 10563 9.899 9.295 8745 8244 77867367 6982 5628 6 302 6002 5724 5.468 5229 5008 4802 46114432 4265 4.308 3962 3.824 15 11118 10 3809712 9108 8.559 8061 7606 7191 6.811 6462 6.142 5 847 5575 5324 5.092 4876 4675 4489 4315 4153 4001 3859 16 11652 10.838 10.106 9447 8.851 831378247379 6.914 5.604 62655954 5668 5 405 5162 4938 4730 4536 4357 419 4033 3887 17 12.166 11 274 10.477 9.763 8.544 8022 7549 2120 6.729 5373 6,047 5749 5.475 5222 4 990 4775 4576 491 429 4059 3910 12 659 11690 10.828 10.0599372 8.7568.201 7702 7250 6 840 6 467 6.128 5.818 5 534 5.273 5033 48124508 419 4243 4080 3.928 19 3:134 12.085 11158 10 33696048950 8365 7839 73666938 6550 6.198 5.877 5584 5316 5070 4843 4635 4442 4263 4097 3942 20 13590 1462 11 470 105949818 9 129 8514 7963 7469 7025 6623 6259 5929 5628 5353 5101 4870 4657 4450 4279 4103954 21 14029 12821 11764 10836 10.017 9.292 8649 80757562 7102 6687 6312 5973 5665 5384 5127 4891 46754475 4292 41213953 22 14451 13163 12.042 11061 10 201 9442 812 8175 7645 7170 6743 6359 6011 5696 540 5149 4909 4690 4488 4302 41303970 23 44857 13.489 12 303 11 272 10371 9580 883 8266 7718 7230 67926399 5044 5723 532 5167 4925 4703 4499 4.311 4373975 24 15 247 79912550 1146910529 97078 985 8348 7784 7283 6835 6434 6073 57465451 5182 4937 4 713 4507 438 483 3981 25 15 622 14.094 12783 1654 1067598239.077 84227843 7330 6872 6 464 6097 5766 5467 5195 4948 4721 454 4393 4173985 26 15.983 14 375 300311826 10.810 9.929 9161 8488 7896372 6,906 6.491 6118 5.78354805 206 4956 4728 4520 43284151 3988 27 16 330 14643 13 211 11987 10935 10.027 9237 548 7943 7409 693565166136 57985492 5 215 4964 4734 4524 4332 4150 3990 28 16 653 16 898 006 12.137 11.651 10.116 9307 8502 984 7441 6951 6534 6152 5810 5502 52234970 4739 45284335 4157992 29 16 98415141 3.591 12.278. 11158 10198 9370 8650 8022 7410 93 6551 6166 5820 5510 5229 4975 4743 4531 432 41543994 30 17292 15 372. 1765 12.409 11.258 10 274 9 427 8694 8055 749670036.566 6177 5.829 551 5275 4979 4746 4514 4339, 4150 1995 19.793 17159 15.046 13.332 11.925 757 9779 89518.244 1634 71056642 6233 5 871 5.548 5258 4997 47904544 434 4166 999 839 * = OWN 9122