The Platinum Touch Mining Company paid $4,000,000 for a parcel of land, including the mining rights. In addition, the company spent $564,700 to prepare the site for mining operations. When mining is completed, it is estimated that the residual value of the asset will be $800,000. Scientists estimate
The Platinum Touch Mining Company paid $4,000,000 for a parcel of land, including the mining rights. In addition, the company spent $564,700 to prepare the site for mining operations. When mining is completed, it is estimated that the residual value of the asset will be $800,000. Scientists estimate
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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The Platinum Touch Mining Company paid $4,000,000 for a parcel of land, including the mining rights. In addition, the company spent $564,700 to prepare the site for mining operations. When mining is completed, it is estimated that the residual value of the asset will be $800,000. Scientists estimate that the site contains 150,000 ounces of platinum.
A. What is the average depletion cost per ounce?
B. If 12,200 ounces were mined in the first year of operation, what is the amount of the depletion cost?
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