Problem 12-16 Net Present Value Analysis (L012-2) 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 Cost to construct new roads in year three Salvage value of equipment in four years $ 420,000 $ 140,000 $ 155,000 $ 48,000 $ 73,000 "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 19% Click here to view Exhibit 12B-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? EXHIBIT 120.4 Present Value of $13 Periods 45 5% 6% 7 89 9 10% 11 12% 139 15% 16% 17% 183 19% 20% 21 22% 23% 75 1 0.962 0952 0.943 0935 0.926 0917 0.909 0.901 0893 0885 0.877 0.870 0862 0855 08470840 08330826 0820 081 0806 0.800 2 0.925 0907 0890 0873 0857 0842 0826 0812 0797 0783 0769 0756 0743 0.731 0718 0706 0694 0683 0572 0661 0630 0640 3 0889 0864 0840 08960794 om 07510731 072 0693 0675 0658 0641 0624 06090593 0579 0564 0551 0537 054 0512 4 0855 0823 0792 0763 0735 0708 0683 0659 0.636 0613 0592 0572 0552 0534 0516 0499 0487 04670451 043 0423 0410 5 0.822 0784 0747 0713 0.681 0.650 0621 0593 0567 0543 0519 0497 0476 0456 0437 0419 0402 0386 03700355 0341 0328 6 0 790 0.746 0.705 0666 0.630 0596 0.564 0.535 0507 0480 0456 0432 0410 0.390 03700352 0335 0319 0303 0789 0275 0262 7 0760 0.711 0.665 0.623 0583 0547 0.513 0482 0452 0425 0400 0376 0354 0.333 0.31 0296 0279 0263 0249 0235 0222 0230 8 0731 06770627 0.582 0540 0502 0 467 0434 0404 0376 0351 0327 0305 0285 0.266 0249 0233 0218 0204 0191 01790168 9 07030645 0.592 0.544 0.500 0460 0424 0391 0361 0333 0308 0284 0.263 0243 0225 0209 0194 0180 0167 0155 0144 0134 10 0.676 064 0.558 0508 0463 0.422 0.386 0352 0322 0295 0270 0247 0227 0208 0.191 0176 01620149 01370126 01150107 11 0650 0.585 0527 0.475 0429 0388 03500317 0287 0261 0237 02150195 0178 0162 0148 035 0123 012 0103 0.094 0086 12 0625 0557 0.497 046 0297 0356 0319 0286 0257 0231 0.208 0.187 0168 0152 0137 0124 0112 0102 0092 0083 00760069 13 0601 0.530 0469 0.415 0.368 0326 0.290 0258 0229 0204 0182 0163 0.145 01300116 0104 0093 0084 00750068 0061 0055 14 0577 0505 0442 0388 0340 0299 0263 0232 0205 0181 0160 0141 01250111 0099, 0088 0.078 0069 0062 0055 0049 0.04 15 0555 0.481 0.41 0.362 0315 0275 0239 0209 0183 0160 0100123 0108 0095 0084 0074 0065 0057 0.051 0.045 0040. 0035 0534 0458 0394 0339 0292 0252 0218 01880163 0941 0123 0907 0093 0081 0071 0062 0054 0047 00420036 0032 0.028 17 0513 0436 0371 0317 02700231 0198 0170 016 01250108 0093 0.0800069 0.060 0,052 0045 0039 0.034 0,030 0.025 0.023 18 0.494 0.41 0.350 0296 0.250 0212 0180 0153 0130 0111 0095 0081 0069 0059 0051 0044 0.038 00320028 0024 0.021 0018 19 0475 0396 0.331 0.277 0232 0194 0164 0138 0116 0098 0083 007000600051 0.043 0037 0.031 0027 0023 0.020 001 001 0456 037 0312 0258 02150178 0149 01240104 0.087 007 0061 0051 0.043 00370031 0.026 0022 0019 0.016, 001001 21 0439 0359 0294 0242 0199 0164 0135 012 0093 0077 0064 0.053 0.044 0037 0031 0026 0022 0.018 00150013 0.01 0.004 22 0422 0342 0278 0226 0184 0150 0123 0101 0083 0068 0.056 0046 0.038 0032 0.026 0022 0.018 0015 000 001 0.009 0.007 23 0.406 0326 0.262 0.211 01700138 0112 0091 0074 0.060 0049 0040 0033 0.027 0.0220018 00150012 0010 0009 0.007 0.006 24 0390 0310 0247 0197 01580126_0302 0082 0056 0053 0043 0035 002 0023 0019 00150013 0010 0.008 0.007 0.00 0.00 0.375 0295 0.233_01B4 0,16 0116 0.092 0.074 0,059 0.047 0.008 0.030 0.024 00200016 0.033.009 0009 0.007 0.006 0005 0004 26 0361 0281 0220 072 01350106 0084 0066 0053 0.002 0033 0.026 0021 0.017 004 0011 0009 0007 0006, 0005 0000 0003 27 0347 0268 0207 0161 0125 0.0980076 0060 0047 0037 0029 0023 0018 0.014 0.011 0009 0007 0006 0005 0.004 00030002 28 0333 0255 0196 0150 0116 0090 0069 0054 0042 0033 0026 0020 0056 0012 0010 0008 0006 0005 0004 003 0002 0002 0.321 02 0185 0141 0107 0082 0063 0048 0037 0029 0022 009 004 0011 000 0006 0.005.0004 0000 0002 00020002 30 0.308 022 0174 0131 0099 0.075 0057 004 0033 0026 0020 00150012 0009 0.007 0.005.0004 0.003 0.003 0002 0.002 0.001 0208 020097 0067 0.005 0.032 0022 0.015 0011 000 0005 0004 0.003 0002 0.001 0.001 0.001 0000 0000 0000 0000 0000 EXHIBIT 128-2 Present Value of an Annuity of St in Arrears , | Periods as 5 1 19:09] 095 196 19 0909 19 09:0895 087 1870 1862 0855 1547 184008 086180 188 | 200 0 BOD 1 Ash 1852 x 18:33 19 135 TU 1590 13 16425 1605 15.25 1566 115ab 1500 12 14 (4) IS2326524 25 15 ) 2022 22 2283 225 22 174 21 16 20212 2015 16: Thin t 35 35 3. 1240 30 31 by 291 29 2855 73 743 200 269 7589 2540 219 24HROM 236 - 10 30033890 31 3696 1605 35 3924 19 323058 2997 2926:54 2803715 2684 5:076 197 6 6 MB 11111 N 18 3889 38 3685589 3499 10 16 135h 09:1020 295 6 5.56 5582 59 5206.5 126.8 47 4 554 4473 42 4 50 4000 3922 1812 106 1605 15018.34 122 1216] F106 591 55; 46 468 4790 46948/ 41 42079 837 1726 36517 1471 ) 75 718 682 556624) 5995 56 5 5378 5Y 4945:41P 4607 445 4303463 101 196 3765 36 3 2463 1 3 02-16 64186589 50 5 58 59 4833 4659494 330 192 10613923 1993682 35.1 11 The R0,RM 1996 10 8056495 6 5998 5.87 5 54 5 009 85 1655 46 47 4405390236 36 985 869 83 7-11 61 62 194 5 5660 54 597 9H 79.1 61 14 27 1395 385] TE 2014 185/8904 8) 47 RA, 5-835:58 90 513 15:4211 (16) 14 HD | 25,989 95 ATAS 24, THER 5982 ba 64 102 60023 24 5461 5279 58 4802.44.2 465 14 15:32 118 90 91 908 19 201705 76811 FOR 2 3847 556324 09:487654189 36 46 1001 1959 115 ) ) 11 II 1824 13 19 56 MB 5 263594 56 55 5624939 40 156 57 111111 2004 9 (27) 2012 5 ) 1047 4 545222 190 15 15 191 12 100 191 29 1800 0 82 009 432 876 82011/02 1250 AMO 6457 5120 5818 554 12 100 442 4500 445 4243 408 1924 TIME T5 LES 0.960M 850 167407166919 5 ) 5 si 5.15 507054) i5 4442 46,4GHT 11: 15W 1 59. NIA 414 1516749 5 6621 0 19 1929 300 1 ; AD by manna 11 10 P8 PM 10 2017 979 RM49 K06 7 M: 712 164 5 59 3M 518 47 4831 167 47 42 41 16 1. 3 ) 2014 CM ) 2011 042 82 86 7645 10 74) 5 59 60 560 30 19999 400 48 21 ) 10 85 ) 2012 01 19814 1 T20 59 6 5.144 57 5432 567925 ani 499 196 5247 7 PM 12 550 11 469 1057-6707 885 83 7784 7283 6855134 605 57 5451 52 1937 46 45043% H3 381 ? 1 194 283 84 10 05942) 9 1422 1843710 687),45.4 60 5/16 3 4.148 4721 4544 4373 447112 6983 11 36003 80 816 990 961 8 88 89 12 6 5806 1.91 618 58:448i 500 16 42 40 gas - | 130 AM 1907 0935 007 9237 359) 7466 6.95 65 56 5798 5:55 1964 34 450 41 44 110 16 63 1-18 16 05] 69207 Ethne 798474466) 65.59 6152 5810 5025223970 4GB 18 16:9 6484 ) - 12. 98 430 3850 8022 10 6987655] 58205510 520.95 24, 45 54) 92 32 HG ZAC),258 02 942) 8691 8055 76 A03 15165 6177 58.1551/ 5215 49 76 15 19 Al 396 s is 11 92 JEp 99 8991 82A TEM t66 SKY 54 558 199 40 4511.3M] | lus 3999 unmin#mm