Question: Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled ( $ 5 . 6 ) million. After

Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled \(\$ 5.6\) million. After the silver is extracted in approximately five years, Smithson is obligated to restore the land to its original condition, including constructing a wildlife preserve. The company's controller has provided the following three cash flow possibilities for the restoration costs: (1)\$500,000,20\% probability; (2)\$550,000,45\% probability; and (3)\$650,000,35\% probability. The company's credit-adjusted, risk-free rate of interest is \(6\%\). What is the initial cost of the silver mine?
Smithson Mining operates a silver mine in Nevada.

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