Problem $14-16($Algo$)$ Net Present Value Analysis $[$LO$14-2]$

Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the

company has mineral rights. The company estimated the following cash flows related to opening and operating a mine in the area:

"Recelpts from sales of ore, less out$-$of$-$pocket costs for salarles, utillttes, Insurance, and so forth.

The mineral deposit would be exhausted after four years of mining. At that polnt, the working capital would be released for

relnvestment elsewhere. The company's requlred rate of return Is $18\%.$

Click here to view Exhilbit $14$B$-1$ and Exhibit $14$B$-2,$ to determine the approprlate discount factor$($s$)$ using tables.

Required:

a$.$ What is the net present value of the proposed mining project?

b$.$ Should the project be accepted?

Complete this question by entering your answers in the tabs below.

Should the project be accepted?