Problem A mining firm estimates that it needs to make an initial investment of 0.5 million in order to employ a new mining method. Geologists and metallurgists for the project base their expectation decisions on the following techno-economic information. Copperbelt University- DMG 241 Survey Economics Study Material Page 11 Scanned by CamScanner 11 Value Parameter 150,000 tpy Production rate Fixed costs $75,000 every year 25% of incremental revenue Variable Costs Marginal tax 35% Mineral royalties 8% on gross revenue Depreciation (SLM) 3 years $300,000 Scrap value Discount rate Mineral commodity price in year 1 is 3.5/tonne. This price is anticipated to rise by 10% per year until the third ycar. (a) Construct the estimated annual cash flows for the project (b) Calculate the NPV to advise management on the launch of the project