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Please this is my 2nd post on the same problem. I need an economic evaluation not an explanation thanks for your help A mineral reserve
Please this is my 2nd post on the same problem. I need an economic evaluation not an explanation
thanks for your help
A mineral reserve containing 1,000,000 ounces of gold is to be in year one, escalating 3% per year in the following years. Other developed and produced uniformly (200,000 ounces per year) over income and tax obligations do not exist against which to use negayears one through five by a corporate investor. The estimated net tive taxable income, so losses must be carried forward to make the smelter return value is $1,100 per ounce in year one, and the net project economics stand alone. Determine the project after-tax cash smelter return is expected to remain at that level in each following flows for years zero through five assuming an effective federal and opment cost of $90,000,000 is to be incurred in time zero. Expense state income tax rate of 25%. Then calculate the project after-tax 70% of the mine development cost at time zero and capitalize the DCFROR and NPV for i=12%. remaining 30% to be amortized over sixty months with a six-month (6/60) amortization deduction at time zero. A mineral rights acquisition cost of $80,000,000 will also be incurred in time zero (the basis for cost depletion calculations), along with equipment cost of $100,000,000 to be depreciated using MACRS depreciation beginning at year one, for a 7-year life with the half-year one convention. Writeoff the remaining book value from the depreciable asset at year five. $17,000,000 will be invested in working capital at time zero for in-process inventories, product inventories, and accounts receivable. Assume all assets, including inventories, will be liquidated at the end of year five for a sale value of $50,000,000 and writeoff all remaining book values to determine the gain or loss. Treat the gain or loss as ordinary income. Operating costs are $70,000,000 A mineral reserve containing 1,000,000 ounces of gold is to be in year one, escalating 3% per year in the following years. Other developed and produced uniformly (200,000 ounces per year) over income and tax obligations do not exist against which to use negayears one through five by a corporate investor. The estimated net tive taxable income, so losses must be carried forward to make the smelter return value is $1,100 per ounce in year one, and the net project economics stand alone. Determine the project after-tax cash smelter return is expected to remain at that level in each following flows for years zero through five assuming an effective federal and opment cost of $90,000,000 is to be incurred in time zero. Expense state income tax rate of 25%. Then calculate the project after-tax 70% of the mine development cost at time zero and capitalize the DCFROR and NPV for i=12%. remaining 30% to be amortized over sixty months with a six-month (6/60) amortization deduction at time zero. A mineral rights acquisition cost of $80,000,000 will also be incurred in time zero (the basis for cost depletion calculations), along with equipment cost of $100,000,000 to be depreciated using MACRS depreciation beginning at year one, for a 7-year life with the half-year one convention. Writeoff the remaining book value from the depreciable asset at year five. $17,000,000 will be invested in working capital at time zero for in-process inventories, product inventories, and accounts receivable. Assume all assets, including inventories, will be liquidated at the end of year five for a sale value of $50,000,000 and writeoff all remaining book values to determine the gain or loss. Treat the gain or loss as ordinary income. Operating costs are $70,000,000Step by Step Solution
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