am. 211. Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land towhich the company has mineral rights. An engineering and cost analysis has been made, and it is expected that thefollowing cash flows would be associated with opening and operating a mine in the area:Cost of new equipment and timbers$ 460,000Working capital required$ 160,000Annual net cash receipts$ 175,000*Footnote asteriskCost to construct new roads in three years $ 52,000Salvage value of equipment in four years $77,000*Footnote asteriskReceipts 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 releasedfor reinvestment elsewhere. The company's required rate of return is 18%.Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables.Required:1. What is the net present value of the proposed mining project?2. Should the project be accepted?

NPV) is a frequently used tool in business decision-making to evaluate the economic viability of…

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. 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 $ 460,000 Working capital required $ 160,000