When WTA, Inc. purchased rights to extract silver from a mine for a total price of $2.1 million 3 years ago, the estimated 350,000 ounces of silver was to be removed over the next 10 years. A total of 175,000 ounces has been removed and sold thus far. (a) What is the total cost depletion allowed over the 3 years? (b) New exploratory tests indicate that only an estimated 100,000 ounces remain in the veins of the mine. What is the cost depletion factor applicable for the next year?
When WTA, Inc. purchased rights to extract silver from a mine for a total price of $2.1 million 3 years ago, the estimated 350,000 ounces of silver was to be removed over the next 10 years. A total of 175,000 ounces has been removed and sold thus far. (a) What is the total cost depletion allowed over the 3 years? (b) New exploratory tests indicate that only an estimated 100,000 ounces remain in the veins of the mine. What is the cost depletion factor applicable for the next year?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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When WTA, Inc. purchased rights to extract silver
from a mine for a total price of $2.1 million 3 years
ago, the estimated 350,000 ounces of silver was to be
removed over the next 10 years. A total of 175,000
ounces has been removed and sold thus far. (a) What is
the total cost depletion allowed over the 3 years? (b)
New exploratory tests indicate that only an estimated
100,000 ounces remain in the veins of the mine. What
is the cost depletion factor applicable for the next year?
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