Meiger Mining, Inc., has just discovered two new mining sites for iron ore. Geologists and engineers have come up with the following estimates regarding costs and ore yields if the mines are opened:

	Site A			Site B
Variable extraction costs per ton	$	3.80		$	4.00
Fixed costs over the life of the mine:
Blasting	$	150,000		$	185,000
Construction		225,000			240,000
Maintenance		25,000			20,000
Restoration costs		40,000			35,000
Total fixed costs	$	440,000		$	480,000
Total tons of ore that can be extracted over the life of the mine:		200,000			160,000

Meiger's owners currently demand a return of 21 percent of the market price of iron ore.

a.	If the current market price of iron ore is $8.22 per ton, what is Meiger's target cost per ton? (Round your intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

Target cost

$

b-1	Given the $8.22 market price, compute the cost per ton for Site A and site B? (Omit the "$" sign in your response.)

	Total cost per ton
Site A	$
Site B	$

b-2	Should either of the mines be opened? compute the cost per ton for Site A and site B?

	Site A
	Site B
	Both

c-1

The engineer working on Site B believes that if a custom conveyor system is installed, the variable extraction cost could be reduced to $3 per ton. The purchase price of the system is $25,000, but the costs to restore the site will increase to $45,000 if it is installed. Given the current $8 market price, compute the cost per ton for Site B? (Round your intermediate and final answer to 2 decimal places. Omit the "$" sign in your response.)

Target cost

$

c-2	Should either of the mines be opened? compute the cost per ton for site B?

	yes
	No