Deep Mines Ltd. of Saskatchewan is contemplating the purchase of equipment to exploit a mineral deposit located on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of new equipment and timbers Working capital required Net annual cash receipts Cost to construct new roads in three years Salvage value of equipment in four years $256,000 89,000 118,000* 44,000 50,000 "Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance and so forth. It is estimated that the mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's discount rate is 20%. Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Required: 1-a. Determine the NPV of the proposed mining project. (Negative amount should be indicated with a minus sign. Round discount factor(s) to 3 decimal places. Round other intermediate calculations and final answer to the nearest whole number.) Net present value

Deep Mines Ltd. of Saskatchewan is contemplating the purchase of equipment to exploit a mineral deposit located on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of new equipment and timbers Working capital required Net annual cash receipts Cost to construct new roads in three years Salvage value of equipment in four years $256,000 89,000 118,000* 44,000 50,000 "Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance and so forth. It is estimated that the mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's discount rate is 20%. Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Required: 1-a. Determine the NPV of the proposed mining project. (Negative amount should be indicated with a minus sign. Round discount factor(s) to 3 decimal places. Round other intermediate calculations and final answer to the nearest whole number.) Net present value

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

None
The first cost of any property includes: the original purchase price and freight and transportation charges installation expenses initial taxes and permits fee all of the above
B) Calculate the AEC (Average Equivalent Cost) of the hospital building using the cost requirements given in Table 3 ) Table 3 Construction Cost OMR 1 million OMR 150,000 Annual Running Cost OMR 30,000 Repainting Costs @ every 2 Years Repair Costs @every 2 years OMR 25,000 Major replacement cost @ 5 years OMR 75,000 (Including the service costs) The demolition cost is estimated at OMR 200,000 (excluding the Salvaged material valued at OMR 60,000) at the end of 15th year. The interest rate (r) is 5% and the Annual Sinking Fund (ASF) is 1.5%. Note: The PV and SF tables is provided as attachment to this question paper.
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory Buildings and equipment, net Accounts payable Common shares Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June $50,000 $60,000 $72,000 $ 8,000 20,000 36,000 120,000 21,750 150,000 12,250 July $90,000 $48,000 c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are the result of March credit sales. d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. e. One-half of a month's inventory purchases is paid for in the month of purchase; the other one-half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. f. Monthly expenses are as follows:…
Vermonto Ltd is putting together a tender for a one-off contract using relevant costing principles. The job requires 50m2 of Material X Vermonto has established the following information regarding material X: Material X Amount held 40m2 Original cost £25 per m2 Net realisable value £28 per m2 Current purchase price £30 per m2 Material X is no longer used by Vermonto for its ongoing operations and any existing inventories will be sold if not used. What is the relevant cost for material X for the purpose of pricing the contract?
18 Jlgw If MR < MC, economic profit decreases if None of the above (A) Output decreases (B Output increases (c) Will move to either direction (D
If the profit function for selling smart phone screen magnifier is -4500p2 + 561500p – 11898000, what is the maximum profit that can be expected from selling smart phone screen magnifiers? Question 1 options: $ 0, no profit $ 5,617,681 $ 1,717,764 -$ 8,004,171
Illustrate the process of computing the capital costs and equivalent annual operating costs?
Evaluate to total present worth of all the cash-flow of machine ABC for an interest rate of 10% per year. Relevant costs are as follows investment cost = $18,000 useful life = 20 years Market value = $5000 Annual operating expenses =$250 Overhead cost end of the 7th year = $500 Overhead cost end of the 14th year = $800
Subject: Engineering Economics Need Step by step solution within 30 minutes.
Note: the answer should be typed.
A trust fund is to be established for providing the costs associated with a small engineering laboratory for the Engineering College. The following costs are required for the engineering laboratory: (1) The construction cost is$1,500,000and the initial equipment cost is$900,000; (2) The annual laboratory operating cost is$250,000for the first 3 years and$200,000thereafter; (3) The cost of equipment replacement is$350,000every 6 years, beginning 6 years from now. How much money is required in the trust fund now to build the engineering laboratory and maintain its perpetual operation and equipment replacement? The interest rate is 8%per year.