Capital Mines NL Is Examining Establishing a Copper Mine on Bougainville

Capital Mines NL is examining establishing a copper mine on Bougainville Island.The mine will cost $250 million to establish.It is expected that the mine will yield $25.4 million next year in revenue,growing at 3% p.a.thereafter.Demand for copper is expected to be high and the mine is expected to operate at full capacity for the foreseeable future.Because the mine uses cyanide in the smelting process the company has agreed to pay compensation of $2.4 million next year to the local people to pay for cleaning the waste up and for social development.This compensation will grow in line with revenue growth.If Capital Mines has a cost of capital of 12%,what is the NPV of the project?

A) - $58,333,333.33
B) $32,222,222.22
C) $5,555,555.55
D) $12,222,222.22