Mai Ling is evaluating a mining prospect. Leasing the land and the mineral rights from the government will cost $450K to win the lease and $50K annually as the lease payment for 22 years. In the first year developing the deposit will require $300K for initial planning and $400K for core drilling to better delineate the deposit.

In year 2, $1.25M will be required to purchase and install the drag-line. Its salvage value will be zero, and it will cost $200K per year to operate. Roads and buildings will cost another $950K in year 1 and $175K annually. At the start of year 3, the following equipment will be purchased: 16 off-road dump trucks for $150K each, 6 pickups for $25K each, 4 loaders for $190K each, and 2 conveyors for $325K each. The pickups will last for 5 years, and the other equipment will last for 10 years. Each has a salvage value estimated to be 10% of its first cost. Annual operating and maintenance costs are estimated to be 35% of the first cost for the vehicles and 20% for the conveyors.

In year 3, the production volume will be 3M tons. This will increase to 4M tons for years 4 through 6, but then it will fall by 2% per year. The initial yield from the deposit will be 1.3%, but this will fall by .04% per year. The minerals are worth $1.80 per pound now, which is expected to increase by $.03 per year

If the firm's interest rate is 9%, find the project's PW.