A piece of land may be purchased for $753957 to be strip mined for the underlying coal.
The annual net income for the mined coal is expected to be $293128 for 10 years.
At the end of the ten years, the surface of the land must be restored due to federal government regulation. This reclamation will cost $1340431.6.
Using a discount rate of 12.5% calculate the Net Present Value of the Project. Give your answer to two decimal places.
Homework Answers
We see that the Net Present Value of the Project is given as
equal
to=-753957+293128/12.5%*(1-1/1.125^10)-1340431.6/1.125^10=456145.1456
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