Problem 11-12A Basic Net Present Value Analysis [LO11-2] Modified 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 Cost of new equipment and timbers Working capital required Annual net cash receipts 275,000 100,000 120,000 Cost to construct new roads in three years $ 40,000 S 65,000 Salvage value of equipment in four years Receipts from sales of ore, less out-of-pocket costs for salaries, utities insurance, and so forth. be released for reinvestment elsewhere. The company s required rate of return is 20% Click here to view Exhibit 11B-1 and Exhibit 118-2. to determine the The mineral deposit would be exhausted after four years of mining At that point. the working capital would approprate discount factor(s) using tables Required ae Determine the net present value of the proposed mining project (Any cash outflows should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s). When you enter a factor, use a whole number followed by 3 decimal places, for example: 0.123.) Cash Flow Year(s) Now Now 1-4 20% PV Factor' 'Cash Flows Purchase of equipment Working capital investment Annual net cash receipts Road construction Working capital released Salvage value of equipment Net present value 1.000 1.000 b Should the project be accepted? Yes No