Pit15. [Fair Value Estimate} (LO E} Murphy Mining Company recently purchased a quartz mine that it intends to work for the next 1|] years. According to state environmental laws, Murphy must restore the mine site to its original natural prairie state after it ceases mining operations at the site. To properly account for the mine, Murphy must estimate the fair value of this asset retirement obligation. This amount will be recorded as a liability and added to the value of the mine on Murphy's books. {You will learn more about iese asset retirement obligations in Chapters and Q.) There is no active market for retirement obligations such as these, but Murphy has developed the following cash ow estimates based on its prior experience in miningsite restoration. It will take 3 years to restore the mine site when mining operations cease in 10 years. Each estimated cash outow reects an annual payment at the end of each year of the 3year restoration period. Restoration Estimated Cash lDutnw Probability Assessment $15, [it] l% BLED!) 3% 25,[l 5t}%