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Linda_us
Linda_us, Finance, Accounts & Homework Tutor
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Simpson Mining is obligated to restore leased land to its original

Resolved Question:

Simpson Mining is obligated to restore leased land to its original condition after its excavation activities are over in three years. The cash flow possibilities and probabilities for the restoration costs in three years are as follows:
Cash Outflow
Probability

$100,000
40%

150,000
30%

200,000
30%



The company's credit-adjusted risk-free interest rate is 5%. The liability that Simpson must record at the beginning of the project for the restoration costs is


A. $145,000.
B. $172,768.
C. $125,257.
D. $129,576.
Submitted: 4 years ago.
Category: Homework
Expert:  Linda_us replied 4 years ago.
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