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Hey can someone do a financial analysis on the following information? The objective is to decide whether or not a mining train station should use
Hey can someone do a financial analysis on the following information?
The objective is to decide whether or not a mining train station should use automated trains or trains with drivers (which one will cost less)
Blue Mountain Mining | ||
Information Sheet | ||
General Information | Amounts | Notes |
Iron ore reserve (tonnes) | 900,000,000 | |
Annual production (tonnes) | 30,000,000 | |
Life of mine (years) | 30 | |
Distance from mine to port (kilometres) | 240 | Round trip is 480 kilometres |
Trains in operation | 3 | Each train comprises locomotives and carriages |
Locomotives per train | 2 | |
Carriages per train | 208 | |
Fuel usage per train (litres per kilometre) | 8 | Averaged over round trip |
Fuel cost ($ per litre) | 1.40 | |
Effective operating days per year | 360 | Used to adjust for maintenance and breakdowns |
Tax rate | 30% | Tax is paid in the year of income |
Discount rate After Tax | 10% | Applies to non-automated and automated options |
Information on Locomotives (per locomotive) | ||
Initial outlay ($) | 2,500,000 | Mine uses MD4400AC trains |
Life of locomotive (years) | 15 | Operative life is shorter than average due to continued operation of trains and load requirements |
Working capital ($) | 500,000 | Fuel, spare parts and related materials |
Maintenance costs per year ($) | 200,000 | |
Depreciation method | Straight Line | Rate = 1/Locomotive Life |
Salvage value at end of year 15 ($) | 0.00 | Mine location and associated costs effectively make locomotives no salvageable |
Information on Drivers | ||
Drivers required (per train, per day) | 4 | Two drivers operate each train. |
Work hours (per driver, per day) | 12 | Each shift covers the trip from the mine to the port or from the port to the mine. |
Driver's weekly working hours (average) | 42 | Averaged as drivers will work 2 weeks on 2 weeks off. |
Driver' yearly working weeks | 48 | Net of leave |
Driver's unavailability due to illness (weeks per year) | 2 | |
Total Driving Hours (per year, per train) | 51,840 | |
Total drivers required | 27 | |
Driver's average annual salary ($) | 220,000 | |
Information on Automation | ||
Additional capital outlay to rail line ($) | 35,000,000 | Sensors and related materials, depreciated straight line over life of mine |
Salvage of additional capital outlay to rail line ($) | 0 | |
Additional capital outlay to locomotive ($, per locomotive) | 250,000 | Sensors and related materials required for all new locomotives, depreciated straight line over life of locomotive |
Salvage of additional capital outlay to locomotives ($, per locomotive) | 0 | |
Additional working capital ($) | 1,000,000 | Total across rail line and all trains |
Fuel efficiency usage adjustment | 93% | Automation reduces fuel usage as locomotives operate more efficiently, e.g. reduces cost by 7% |
Maintenance cost adjustment | 95% | Automation reduces maintenance costs through less wear and tear, and breakdowns of locomotives, e.g. reduces cost by 5% |
Drivers required | 0 | No drivers required due to automation |
Total automation technicians required | 6 | Additional technicians required to maintain locomotives and rail line |
Automation technician's average annual salary ($) | 150,000 |
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