A coal mine is expected to produce coal for 30 years. Coal production in the first year is estimated at 30 thousand tons in the first year and will decrease by one thousand tons every year. The price of coal was set at $100 in the first 20 years and increased to $150 in subsequent years. If the interest rate is 12% per year, what is the total value of coal sales for 30 years calculated now and at the end of the 30th year?
A coal mine is expected to produce coal for 30 years. Coal production in the first year is estimated at 30 thousand tons in the first year and will decrease by one thousand tons every year. The price of coal was set at $100 in the first 20 years and increased to $150 in subsequent years. If the interest rate is 12% per year, what is the total value of coal sales for 30 years calculated now and at the end of the 30th year?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
A coal mine is expected to produce coal for 30 years. Coal production in the first year is estimated at 30 thousand tons in the first year and will decrease by one thousand tons every year. The price of coal was set at $100 in the first 20 years and increased to $150 in subsequent years. If the interest rate is 12% per year, what is the total value of coal sales for 30 years calculated now and at the end of the 30th year?
Expert Solution
Inputs
Time Period = N = 30 years
Production in first year = 30,000 tons
Decrease in production every year = 1000 tons
Price per ton in first 20 years = 100
Price per ton in last 10 years = 150
Interest Rate = 12%
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