Maximum

Maximum 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 Maximum

Maximum at no cost. Maximum

Maximum 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:

Maximum 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 Maximum at no cost. Maximum 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 muirements. Requirement 1. Assuming that Maximum expects to salvage 70,000 tons of metal from the site, what is the total project life cycle cost? Total Life-Cycle Costs Variable costs: Metal extraction and processing :| Fixed costs: Metal extraction and processing :| Rent on temporary buildings :| Administration :| Clean-up :| Land restoration |:| Sellingland E Total life-cycle cost l;l Months 1-24 Months 1-27 Months 25-27 Metal extraction and processing Rent on temporary buildings Administration Clean-up Land restoration Cost of selling land Fixed $2,000 per month $1,000 per month $6,000 per month $20,000 per month $23,000 total $80,000 total Variable $80 per ton Ignore the time value of money. 1. Assuming that Maximum expects to salvage 70,000 tons of metal from the site, what is the total project life cycle cost? 2. Suppose Maximum can sell the metal for $110 per ton and wants to earn a prot (before taxes) of $30 per ton. At what price must Maximum sell the land at the end of the project to achieve its target prot per ton? 3. Now suppose Maximum can only sell the metal for $100 per ton and the land at $110,000 less than what you calculated in requirement 2. If Maximum 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