Question: A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will

A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will decline $5000 a year after that, eventually reaching zero, whereupon the mine will be worthless. What rate of return would this $240,000 investment produce for the purchaser of the mine?

Step by Step Solution

★★★★★

3.50 Rating (167 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

240000 65000 PA i 13 5000 PG i 13 Try i 15 650... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

7-B-E-M (129).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Q:

It is believed that cross-fertilized plants produce taller offspring than self-fertilized plants. In order to obtain an estimate on the proportion y of cross-fertilized plants that are taller, an...

Q:

A mine costing $275 will produce 1 ounce of gold on the day the cost is paid. Gold volatility is zero. What is the value of the mine?

Q:

A mine costing $275 will produce 1 ounce of gold on the day the cost is paid. Gold volatility is zero. What is the value of the mine? Discuss.

Q:

1. a. A mining firm makes annual deposits of $100,000 into a reclamation fund for 12 years. If the firm must have $2million when the mine is closed, what interest rate XX% must the investment earn?...

Q:

A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will decline $5000 a year after that, eventually reaching zero, whereupon the...

Q:

A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will decline $5000 a year after that, eventually reaching zero, whereupon the...

Q:

11. A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will decline $5000 a year after that, eventually reaching zero, whereupon...

Q:

A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will decline $5000 a year after that, eventually reaching zero, whereupon the...

Q:

A mine is for sale for $450,000. It is believed the mine will produce a profit of $100,000 the first year, but the profit will decline $5000 a year after that, eventually reaching zero, whereupon the...

Q:

A mine is for sale for $235,750. It is believed the mine will produce a profit of $66,000 the first year, but the profit will decline $5,500 a year after that, eventually reaching zero, whereupon the...

Q:

Two objects, A and B have the following 1D position vs. time graphs. Determine the average speed of Object B the 10 second interval. ( 2 marks ) 0.4 m/s 9.8 m/s 0.00 m/s 12 m/s 0.5 m/s Which object...

Q:

The adjusted trial balance of Dredge Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2012: Sales Revenue $900,000; Freight-out $14,000; Sales Returns and...

Q:

As a tax preparer, which of the following actions should you take to follow the IRS due diligence standards for a sole proprietor without books and records? Estimate income and expenses based on...

Q:

8. Naser's elasticity of demand for Beef is equal 0.6.When the price is $2 per Kg, he buys 10 kg How many units will he buy when the price is $1.00 per Kg ? Select one: O a. 7Kg O b. 9Kg Oc 10Kg C. O...

Q:

30. If the price of each pack of cigarettes is $5.00 and the price elasticity of demand for tobacco is 0.4. Health care policy makers are interested in lowering the amount of tobacco consumption by...

Q:

3. Using Biot-Savart's law determine the magnetic field at the point on the axis of the Helmholtz coil. Remember that Helmholtz coils by definition consists of two coils of same radius and separated...

Q:

11. Cordero Corporation has an employee share-purchase plan which permits all full-time employees to purchase 10 ordinary shares on the third anniversary of their employment and an additional

Q:

According to Descartes' rule of signs, how many i* values are possible for the cash flowsshown? Year Revenue, S 25,000 13,000 4,000 70,000 Costs, $ 30,000-7,000 -6,000-12,000

Q:

For the cash flows shown, determine the sum of the cumulative cashflows. Year Revenue, $ Costs, $ |-6.000-30.000-7,000-6,000-12.000 25,000 15,000 4,000 18,000

Q:

Stan-Rite Corp of Manitowoc, Wisconsin, is a B to B company that manufactures many types of industrial products, including portable measuring arms with absolute encoders, designed to perform 3D...

Q:

Julie received a $50 bill for her birthday at the end of January. At the end of February, she spent this $50 and an additional $150 to buy clothes. Her parents then gave her $50 and $125 at the end...

Q:

Veggie Burger Boy sells franchises to individuals who want to start small in the sandwiches-for-vegeterians business and grow in net cash flow over the years. A franchisee in Mississippi provided the...

Q:

Part 3 : Consider the following seven - year fixed rate note that pays on a semi - annual basis. Note matures 1 1 2 ? 2 0 3 1 with a coupon rate of 7 . 0 0 % Settlement date is 1 1 2 ? 2 0 2 4 , and...