. An ore reserve containing 500,000 tons of ore is to be produced uniformly over a...

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. An ore reserve containing 500,000 tons of ore is to be produced uniformly over a 5 year period. The estimated price of ore is 3,300,000 TL/ton, royalties are 300,000 TL/ton of production and annual operating costs are 1,000,000 TL per ton. Investment cost for this mine is given below: Mineral Rights Acquisition Costs Developement Costs Mining Plant Mining Equipment Processing Plant Processing Equipment 100,000,000,000 TL 120,000,000,000 TL 60,000,000,000 TL 70,000,000,000 TL 50,000,000,000 TL 60,000,000,000 TL 40,000,000,000 TL, Depletion amount is Salvage value of the equipments is 50,000,000,000 TL for each year, firm is using SLM & tax rate is 50%. Investment period is 3 years(years 0,1 and 2), the equipments will be purchased in year 1 and development will be done in year 2. All other investments will be made at year 0. After the investments, the production will start at year 3. If MARR(AT) is 15% determine whether this is a desirable investment or not? . An ore reserve containing 500,000 tons of ore is to be produced uniformly over a 5 year period. The estimated price of ore is 3,300,000 TL/ton, royalties are 300,000 TL/ton of production and annual operating costs are 1,000,000 TL per ton. Investment cost for this mine is given below: Mineral Rights Acquisition Costs Developement Costs Mining Plant Mining Equipment Processing Plant Processing Equipment 100,000,000,000 TL 120,000,000,000 TL 60,000,000,000 TL 70,000,000,000 TL 50,000,000,000 TL 60,000,000,000 TL 40,000,000,000 TL, Depletion amount is Salvage value of the equipments is 50,000,000,000 TL for each year, firm is using SLM & tax rate is 50%. Investment period is 3 years(years 0,1 and 2), the equipments will be purchased in year 1 and development will be done in year 2. All other investments will be made at year 0. After the investments, the production will start at year 3. If MARR(AT) is 15% determine whether this is a desirable investment or not?

Answer rating: 100% (QA)

To determine whether this is a desirable investment or not we need to calculate the net present value NPV of the project First lets calculate the annu... View the full answer