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Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled $7.4...

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Accounting

Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled $7.4 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)
$680,000,15% probability; (2) $730,000,45% probability; and (3) $830,000,40% probability. The company's credit-adjusted, risk-free
rate of interest is 6%.
What is the initial cost of the silver mine?
Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Enter your answers in whole
dollars. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
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