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Use Excel to solve this problem. Northern Engineering is analyzing a mining project. Annual production, unit costs, and unit revenues are in the table. The first cost of the mine setup is $6 million. If i is 15%, what is the PW?

Use Excel to solve this problem. Northern Engineering is analyzing a mining project. Annual production, unit costs, and unit revenues are in the table. The first cost of the mine setup is $6 million. If i is 15%, what is the PW?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Use Excel to solve this problem.
Northern Engineering is analyzing a mining project. Annual production, unit costs, and
unit revenues are in the table. The first cost of the mine setup is $6 million. If i is 15%,
what is the PW?

 

### Annual Production and Cost Analysis The table below provides a comprehensive overview of production, cost, and price data for a product over a 7-year period. The key metrics analyzed are the annual production in tons, the cost per ton, and the price per ton. | **Year** | **Annual Production (tons)** | **Cost per Ton** | **Price per Ton** | |----------|------------------------------|------------------|-------------------| | 1 | 90,000 | $25 | $35 | | 2 | 120,000 | $20 | $36 | | 3 | 120,000 | $22 | $37 | | 4 | 100,000 | $24 | $38 | | 5 | 80,000 | $26 | $39 | | 6 | 60,000 | $28 | $40 | | 7 | 40,000 | $30 | $41 | #### Analysis: 1. **Annual Production**: - The highest production recorded was in Years 2 and 3, with 120,000 tons each. - Production has shown a declining trend from Year 4 onwards, hitting the lowest point in Year 7 with 40,000 tons. 2. **Cost per Ton**: - The cost per ton decreases initially, reaching the lowest in Year 2 at $20 per ton. - After Year 2, the cost per ton starts increasing, ending at $30 per ton in Year 7. 3. **Price per Ton**: - The price per ton shows a gradual increase over the 7 years, starting at $35 in Year 1 and rising to $41 in Year 7. #### Observations: - While the cost per ton demonstrates an initial decrease followed by a consistent increase, the price per ton has shown a steady rise throughout the period. - The annual production peaked in Years 2 and 3 but has since experienced a decline, which could be attributed to increasing production costs impacting the quantities produced. This data is valuable in understanding the trends in production costs, pricing strategies, and overall production efficiency over a period of seven years. Such analysis can be crucial for planning future production and pricing strategies.
Transcribed Image Text:### Annual Production and Cost Analysis The table below provides a comprehensive overview of production, cost, and price data for a product over a 7-year period. The key metrics analyzed are the annual production in tons, the cost per ton, and the price per ton. | **Year** | **Annual Production (tons)** | **Cost per Ton** | **Price per Ton** | |----------|------------------------------|------------------|-------------------| | 1 | 90,000 | $25 | $35 | | 2 | 120,000 | $20 | $36 | | 3 | 120,000 | $22 | $37 | | 4 | 100,000 | $24 | $38 | | 5 | 80,000 | $26 | $39 | | 6 | 60,000 | $28 | $40 | | 7 | 40,000 | $30 | $41 | #### Analysis: 1. **Annual Production**: - The highest production recorded was in Years 2 and 3, with 120,000 tons each. - Production has shown a declining trend from Year 4 onwards, hitting the lowest point in Year 7 with 40,000 tons. 2. **Cost per Ton**: - The cost per ton decreases initially, reaching the lowest in Year 2 at $20 per ton. - After Year 2, the cost per ton starts increasing, ending at $30 per ton in Year 7. 3. **Price per Ton**: - The price per ton shows a gradual increase over the 7 years, starting at $35 in Year 1 and rising to $41 in Year 7. #### Observations: - While the cost per ton demonstrates an initial decrease followed by a consistent increase, the price per ton has shown a steady rise throughout the period. - The annual production peaked in Years 2 and 3 but has since experienced a decline, which could be attributed to increasing production costs impacting the quantities produced. This data is valuable in understanding the trends in production costs, pricing strategies, and overall production efficiency over a period of seven years. Such analysis can be crucial for planning future production and pricing strategies.
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