Question
3- Trovallero Mining is contemplating purchasing a portable crusher for the production of crushed rock for the maintenance of its roads. Given the following information,
3- Trovallero Mining is contemplating purchasing a portable crusher for the production of crushed rock for the maintenance of its roads. Given the following information, should Trovarello Mining continue outsourcing the crushed rock material or should it invest in the purchase of a portable crusher? What is the payback period of the project? Discuss your results. (12 points) Cost of portable crusher: $850,000 Delivery: Included in price. Expected economic live of crusher: 5 years Depreciation method: Straight line Tax rate: 30% Cost of maintenance & operator: $160/hour (all maintenance is done on day shift) Uptime of portable crusher: 5 hours / 8 hour shift (to be operated on day shift only, on a 5 day week basis, 251 days per year) Cost of additional 8 hour shifts (same uptime will apply) if required: $38.50/hour Portable crusher maximum output: 23 tonnes /hour Yearly crushed rock requirement: 50,000 tonnes Cost of outsourcing material: Crushed rock delivered to headframe: $8.50/ tonne Delivery underground through bore hole: $2.10/ tonne Underground transport to storage area: $1.75/ tonne
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