One method for developing a mine containing an estimated 100,000 tons of ore will result in the recovery of 58% of the available ore deposit and will cost $24 per ton of material removed. A second method of development will recover only 52% of the ore deposit, but it will cost only $16 per ton of material removed. Subsequent processing of the removed ore recovers 300 pounds of metal from each ton of processed ore and costs $41 per ton of ore processed. The recovered metal can be sold for $0.82 per pound. You can sell all the metal that is recovered. Which method for developing the mine should be used if your objective is to maximize total profit from the mine?

One method for developing a mine containing an estimated 100,000 tons of ore will result in the recovery of 58% of the available ore deposit and will cost $24 per ton of material removed. A second method of development will recover only 52% of the ore deposit, but it will cost only $16 per ton of material removed. Subsequent processing of the removed ore recovers 300 pounds of metal from each ton of processed ore and costs $41 per ton of ore processed. The recovered metal can be sold for $0.82 per pound. You can sell all the metal that is recovered. Which method for developing the mine should be used if your objective is to maximize total profit from the mine?

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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Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $640,000, an operating cost of $66,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,140,000, an operating cost of $25,000 per year, and a $120,000 salvage value after its 4-year life. Process W will also require updating at the end of year 2 at a cost of $90,000. Which process should be selected on the basis of a present worth analysis at a MARR of 12% per year? The present worth of process T is $- and the present worth of process W is $-[223662 The process selected on the basis of the present worth analysis is process
Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $660,000, an operating cost of $90,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,100,000, an operating cost of $25,000 per year, and a $120,000 salvage value after its 4-year life. Process W will also require updating at the end of year 2 at a cost of $90,000. Which process should be selected on the basis of a present worth analysis at a MARR of 12% per year? The present worth of process T is $− , and the present worth of process W is $− The process selected on the basis of the present worth analysis is process is W or T
The Perth Mining Co. operates 2 mines for the purpose of extricating bronze and platinum. The Saddle Mine costs $14,000/day to operate, and it yields 50oz of bronze and 3,000ozof platinum each day. The Horseshoe Mine costs $16,000/day to operate, and ityields 75ozof bronze and 1,000oz of platinum each day. Company management has set a target of at least 650oz of bronze and 18,000oz of platinum. How many days should each mine be operated so that the target can be met at a minimum cost? What is the minimum cost?
You are evaluating two different silicon wafer milling machines. The Techron I costs $258,000, has a three-year life, and has pretax operating costs of $69,000 per year. The Techron II costs $450,000, has a five-year life, and has pretax operating costs of $42,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $46,000. If your tax rate is 21 percent and your discount rate is 9 percent, compute the EAC for both machines. Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
You are evaluating two different silicon wafer milling machines. The Techron I costs $255,000, has a three-year life, and has pretax operating costs of $68,000 per year. The Techron II costs $445,000, has a five-year life, and has pretax operating costs of $41,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $45,000. If your tax rate is 25 percent and your discount rate is 8 percent, compute the EAC for both machines. (Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
You are evaluating two different silicon wafer milling machines. The Techron I costs $258,000, has a three-year life, and has pretax operating costs of $69,000 per year. The Techron II costs $450,000, has a five-year life, and has pretax operating costs of $42,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $46,000. If your tax rate is 25 percent and your discount rate is 10 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
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A production plant manager has been presented with two proposals for automating an assembly process. Proposal A involve an initial cost of $15000 and an annual operating cost of $2000 per year for the next 4 years . Thereafter, the operating cost is expected to be $2700 per year. This equipment is expected to have a 20-year life with no salvage value. Proposal B requires an initial investment of $25000 and an annual operating cost of $1200 per year for the first 3 years. Thereafter, the operating cost is expected to increase by $120 per year. This equipment is expected to last 20 years and have a salvage value of $2000. If the company's MARR is 10%, which should be accepted using ROR analysis?
You are evaluating two different silicon wafer milling machines. The Techron I costs $265,000, has a 3-year life, and has pretax operating costs of $41,000 per year. The Techron II costs $330,000, has a 5-year life, and has pretax operating costs of $52,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $25,000. If your tax rate is 21 percent and your discount rate is 9 percent, compute the EAC for both machines.

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