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 woul be associated with opening and operating a mine in the area: 0:56:43 Cost of new equipment and timbers Working capital required Annual net cash receipts Cost to construet new roads in year three Salvage value of equipment in four years $ 400,000 $ 130,000 $ 145,000 $ 46,000 $ 71,000 *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 128-2. 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? EXHIBIT 120-1 Present Value of State 7% 5% 8% 6% 9% Periods 4% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 23% 22% 245 25% 1 09620952 0943 0935 0926 0917 0.909 0.901 0893 0.885 0.877 0.870 0.862 0.855 0847 0.840 0.833 0.826 0820 0.813 0806 0800 2 0925 0907 08900873 0857 0842 0826 0812 0797 0783 0.769 0.756 0743 0731 0718 0706 0694 0683 0672 0661 0650 0640 3 0889 0.864 0840 0816 0794 072 0751 0731 0712 0693 0675 0658 0.641 0624 06090593 0.579 0564 0551 0537 0.524 0512 4 0855 0823 07920763 0.735 0708 0683 0659 0636 0613 0.592 0572 0552 0534 0516 0499 0482 04670451 0437 0423 0.450 5 0822 0784 077 0713 0681 0650 0621 0593 0567 0543 0519 0.497 0.476 0.456 0.037 0.419 0.402 0.386 0.370 0.355 0.341 0.328 6 0.790 0746 0705 0666 0.630 0.596 0.564 0535 0507 0480 0456 0.432 0410 0.390 0.370 0352 0.335 0.319 0303 0289 0275 0262 7 0760 070665 0623 0583 0541 0513 0482 0452 0425 0400 0376 0354 0333 0.314 0296 0279 0263 0249 0235 0222 0210 8 0731 0677 0627 05820540 0.502 0.467 0434 0.404 0376 0351 0327 0.305 0285 0266 0249 0233 0218 0204 0191 0179 0168 9 0703 0645 0.592 0.544 0500 0.460 0424 0.391 0361 0333 0308 0284 0263 0243 0225 0209 0194 0180 0167 0155 014 0134 100576 064 0558 0508 0463 0422 0386 0352 0322 0295 0270 0247 0227 0208 0191 0176 0162 019 01370126 0116 0107 11 0650 0585 0527 0475 0.429 0388 0350 031 0287 0 261 0237 0.215 01950178 0162 048 0135 0123 012 0103 0094 0086 2 0625 0557 0497 0444 0.397 0356 0319 0286 0257 0231 0208 0182 0168 0152 0137 0124 01120102 0092 008 0076 0069 130601 0530 049 045 0.368 0326 0290 0258 0229 0204 0182 013 015 01300116 0104 0093 0084 0075 0068 0061 0055 1 0571 0505 042 0388 0.340 0299 0263 0232 0205 0181 0160 OM1012501110099 0088 0078 0069 0062 0055 0049 004 15 0555 0481 0417 0362 0315 0275 0239 0209 0183 0150 0100123 0108 009 0084 007 0065 0057 005 0045 0040 0035 15 0534 0458 039 039 0292 0252 0218 01 016 01101010 0090 OOR 007 0062 0054 0047 0042 0036 0032 0028 17 050 043503703170270 0231 0108 0110 01501250108 0093 000 0069 0060 0052 0045 0039 004 0030 0026 0023 18 0494 0.41 0.750 0296 0250 022 0180 015) 0130 0110095 OO 0009 0058 0051 000 000 0032 0028 0024 0.021 005 19 0475 0.396 0331 02 0232 0194 0164 00 01100 00 007000600051 000 0037 003 0027 0023 0020 000 001 200456 0.371 032 0258 02150178 090124 0104 007 007 0061 0051 000 003 0001 0026 0022 000 0000 0012 21 049 0359 0294 0242 0199 014 013501120093 007 0064 003 004 003 0031 0026 0022 006 005 000 000 0009 22 002 0342 0278 0226 0184 015001230101 000 0058 0056 0046 003 0032 0025002200700150010010009 0007 23 0405 0326 0262 021101700138012 009 0014 0060 0049 0040 0000 0027 0022 000 001500100100009 000 0005 24 0.390 0.310 0247 0197 0158 01260102 002 0006 0053 000 0035 0008 0023 00190095 000 000 000 25 000 0005 0005 0.375 0295 020184 0901160092 000059 000 000 0000 0024 0020 001 000 000 000 000 000 000 000 260361 02 0220 01 00501050084 0066 0053 0002 00 0026 002 001 0000 2104 0268 0207 01610050098 007 0060 000 0037 0029 0023 000 0000 000 000 000 000 0004 0003 0000 000 000 0005 000 280 000 0002 0255 016 015001160090 0005 0054 000 000 0026 0020 000 000 000 000 000 000 29 0321 020 015 014 000 000 00020002 0101 002 0063 000 001 0.029 0022 000 0 300308 0231 01100100990075 0057 004 0033 006 0020 000 000 000 000 000 000 000 000 000 0002 00 000 000 0005 0000 0000 0002 0002 0002 40 020 0 005 006 004 0032002200 001 000 000 000 0000 0000 000 000 000 000 0000 0000 0000 0000 0000 EXHIBIT 128-2 Present Value of an Annuity of $1 in Arrears: - Periods 35 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 15% 20% 276 225 235 245 255 1 0.962 0.952 0.913 0935 0.926 0.90 0.909 0.901 0893 0885 0877 0.870 0852 0855 0847 0840 0533 0826 0820 081 0806 0.800 2 1686 1859 1833 1808 1753 1759 1736 173 1690 1668 1647 1626 1605 1585 1566 1541 1528 1509 1492 1474 1457 1460 3 2775 2723 2673 2624 2577 25312487 244 2402 2351 2322 2283 2246 2210 2174 20 206 2074 2012 2011 1981 1952 4 3630354634653387 3312 32403170302 3037 2.974 2914 2855 2798 270 2690 2639 2589 2540 2494 248 2404 2362 5 4452 43294212 4100 3990 3890 391 3695 3605 3517 3.433 3352 3274 3199 3127 3058 2991 2926 2864 2803 2745 2589 520250764917 467 462 4686 4355 4231 4m 3998 389 3784 3685 3589 3498 3410 3.326 3245 31673092 3020 2951 7 600257865582538952065033 4868 4712 4564 4.423 4288 41604039 3922 3.812 37063605 3.508 3.41 3.327 3242 3161 8 673 64636210 5971 5741 5535 5335 5546 4968 47994639 4487 43444207 4078 3954 3837 3.726 3619 3518 3421 3329 9 7455 75086802 651562475995 5759 5537 5328 5132 49464772 4601 4451 4303 416340313905 376 3673 3566 3.463 10 87 772273607024 6710 6.418 6345 5889 5650 5426 5 216 5019 4833 4659 4494 439 4192 4054 3.923 3799 3682 3571 11 8760830678877499 7039 6805 6 495 6 207 5938 5687 5.453 5234 5029 48364656 4486 4327 4177 4035 3.902 37763656 129385886383842943753675616814 6492 6194 5998 5660 5.421 5197 4988 479346114439 4278 4127 39853851 3725 139986994885383587904 707 703 67506424 6122 582 5583 52 511 4950 475 4513 4362 4203 4053 3912 3780 14 056398999295874582477867367 6982 6 628 6302 6002 57245 468 5229 5008 402 461 462 4265 4103962 3824 151118 80380972 9108 855980617606 711 681 6452 632 5847 5575 5324 5092 4876 4675 449 4315415340013859 16 11652 103 10:106 9418518 7 24 239 6914 6601 6 265 5954 5668 5 405 51524908 4730 456 457 458 4033 3887 1 2 5 112740477 9763 922 851 8022 2549 7067296.373 6041 579 5475 5222 4950 47545754391421940593910 18 2659 11690 10828 100589372 8756 8201 702 7250 68406 457 6128 5.818 5524 5273 5037 4 4608 449 420 COD 3528 19 014 2015 11158 3596048950 8365 789 7366 698 6550 638 5 55845 5070 480 465 442 4253 4097 3902 20 0590 2452114705949 902985796374657025 6923 5259 5929 5628 535 510 420 4657 4450 42403954 21 023 0221 11764050179232 8549 07 7562 725687 632 53 5665 51 5127446 4 252 4011963 22 45135532042061 201 42 8217676457105735359 601 566 5410 5 490 400 4302 00 1970 23 57 69 23031212 950 8265 778 7230 57926799 500 523 52574525 1 975 2452473790550160529970783687747203685 504 503 516 5651 52 53 502 3561 25 5622 M 2 16540675 523 977 422 0 733068735546097 576 5657 55 47215 2 155 2 21 000 17001370579074095975 55 55 55 52 52 1 051 252 755 5551 554 55 50 552 522 450 23 5 22795810305020227005550 5652055229 25 1529065745670036556 57 58 50 52 5 4540 5 45952 5 55 54 55
