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Insidered to shorten the over- ereby increasing the total provements is estimated to be cks make 16 cycles per day given the truck perfor- 2.000.000

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Insidered to shorten the over- ereby increasing the total provements is estimated to be cks make 16 cycles per day given the truck perfor- 2.000.000 tons of ore nt is made, the number of iction from the mine. 4-18 Improvement to a mine haul road is being considered to all haul distance and reduce truck cycle times, thereby increasi number of cycles per day. The cost of the improvements is $6.000.000 at time zero. Currently, the trucks make 16 cycle from the mine pit to a crushing facility which, given the truck mance, capacities and haul distance, translates into 2.000.000 + being hauled each year. If the road improvement is made, the cycles is anticipated to increase by 25% to 20 cycles per day which lates into an additional 500,000 tons of annual production from the Total mine reserves are estimated to be 14,000,000 tons. If the haul med improvement is made, the life of the mine will be shortened from seven to six years due to the accelerated production schedule. With the modified haul road, total production in years one through five would be 2.500.000 tons per year with year six production totaling 1,500,000 tons at which time the reserves would be depleted. For each alternative, the average ore grade is 0.09 ounces per ton with a 0.85 recovery rate. The average selling price is $350.00 per ounce while the operating costs are $190.00 per ounce beginning in year 1. The minimum acceptable rate of return is 15.0%. For this acceleration problem, use rate of return analysis to determine if the haul road improvement can be economically justified. Then verify your findings with a net present value analysis

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