Fixed Variable Months 1-24 Metal extraction and processing 33,500 per month 395 per ton Months 1-27 Rent on temporary buildings 32,500 per month - Administration 36,500 per month - Months 25-27 Clean-up $31,000 per month - Land restoration 745,000 total - Cost of selling land 385,000 total - G G Ignore the time value of money. 1. Assuming that Rejuv expects to salvage 50,000 tons of metal from the site, what is the total project life cycle cost? 2. Suppose Rejuv can sell the metal for $140 per ton and wants to earn a profit (before taxes) of $30 per ton. At what price must Rejuv sell the land at the end of the project to achieve its target profit per ton? 3. Now suppose Rejuv can only sell the metal for 5130 per ton and the land at 360,000 less than what you calculated in requirement 2. If Rejuv wanted to maintain the same markup percentage on total project life-cycle cost as in requirement 2, by how much would the company have to reduce its total project life-cycle cost? Rejuv Metal Recycling and Salvage receives the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site to Rejuv at no cost. Rejuv intends to extract scrap metal at the site for 24 months, and then will clean up the site, return the land to useable condition, and sell it to a developer. Projected costs associated with the project follow: A (Click the icon to view the project costs.) Read the (EOUTEmend. Requirement 1. Assuming that Rejuv expects to salvage 50,000 tons of metal from the site, what is the total project life cycle cost? Total Life-Cycle Costs Variable costs: Metal extraction and processing 4,750,000 Fixed costs Metal extraction and processing 84,000 Rent on temporary buildings 67 500 Administration 175,500 Clean-up 93,000 Land restoration 745,000 Selling land 85000 Total life-cycle cost 65,000,000 Requirement 2. Suppose Rejuv can sell the metal for $140 per ton and wants to earn a profit (before taxes) of $30 per ton. At what price must Rejuv sell the land at the end of the project to achieve its target profit per ton? The life-cycle operating income Rejuv wants to earn is Now complete the projected life-cycle income statement to determine at what price Rejuv must sell the land at the end of the project to achieve its target profit per ton Projected Life Cycle Income Statement Revenue Sale of land Total life-cycle cost Life-cycle operating income Requirement 3. Now suppose Rejuv can only sell the metal for $130 per ton and the land at $80,000 less than what you calculated in requirement 2_ If Rejuv wanted to maintain the same markup percentage on total project life-cycle cost as in requirement 2, by how much would the company have to reduce its total project life-cycle cost? First, compute Rejuv's mark-up percentage in requirement 2. Determine the formula, then compute the mark-up percentage. (Round mark-up to the nearest whole percentage ) Life-cycle operating income | = | Total life-cycle cost v Mark-up percentage = % Next, compute what Rejuvs new cost will have to be. Determine the formula, then compute the revised total life-cycle cost. (Enter any ratios up to two decimals, X. 20 Round the new cost to the nearest dollar.) ( MNew revenue + | New sale price ofland | ) = ( + )+ - New total life-cycle cost Finally, how much would Rejuv have to reduce its total project life-cycle cost? Rejuv would have to reduce its total project life-cycle cost by to maintain the same mark-up percentage as in requirement 2