2 Solucion Bethesda Mining Company
4
Chapter 6 Bethesda Mining Input area: Equipment $ 85,000,000 Land cost $ 6,000,000 Aftertax land value $ 7,000,000 Contract sales/tons 500,000 Year 1 production 620,000 Year 2 production 680,000 Year 3 production 730,000 Year 4 production 590,000 Contract $/ton $95 Spot market $/ton $90 Variable cost/ton $31 Year 1 depreciation 14.30% Year 2 depreciation 24.50% Year 3 depreciation 17.50% Year 4 depreciation 12.50% Fixed costs $4,300,000 Reclamation costs $2,800,000 Charitable expense $7,500,000 NWC percent 5% Tax rate 38% Required return 12% Output area: Time 0 cash flow Equipment $ (85,000,000) Land (7,000,000) NWC (2,915,000) Total ($94,915,000) Sales Year 1 Year 2 Contract $ 47,500,000 $ 47,500,000 Spot 10,800,000 16,200,000 Total $ 58,300,000 $ 63,700,000
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Solution Bethesda Mining company
Transcript of 2 Solucion Bethesda Mining Company
Chapter 6Bethesda Mining
Input area:
Equipment $ 85,000,000 Land cost $ 6,000,000 Aftertax land value $ 7,000,000 Contract sales/tons 500,000 Year 1 production 620,000 Year 2 production 680,000 Year 3 production 730,000 Year 4 production 590,000 Contract $/ton $95 Spot market $/ton $90 Variable cost/ton $31 Year 1 depreciation 14.30%Year 2 depreciation 24.50%Year 3 depreciation 17.50%Year 4 depreciation 12.50%Fixed costs $4,300,000 Reclamation costs $2,800,000 Charitable expense $7,500,000 NWC percent 5%Tax rate 38%Required return 12%
Output area:
Time 0 cash flowEquipment $ (85,000,000)Land (7,000,000)NWC (2,915,000)Total ($94,915,000)
Sales Year 1 Year 2 Year 3Contract $ 47,500,000 $ 47,500,000 $ 47,500,000 Spot 10,800,000 16,200,000 20,700,000 Total $ 58,300,000 $ 63,700,000 $ 68,200,000
Sales $ 58,300,000 $ 63,700,000 $ 68,200,000 VC 19,220,000 21,080,000 22,630,000 FC 4,300,000 4,300,000 4,300,000 Dep 12,155,000 20,825,000 14,875,000 EBT $ 22,625,000 $ 17,495,000 $ 26,395,000 Tax 8,597,500 6,648,100 10,030,100 NI $ 14,027,500 $ 10,846,900 $ 16,364,900 + Dep 12,155,000 20,825,000 14,875,000 OCF $ 26,182,500 $ 31,671,900 $ 31,239,900
Beginning NWC $ 2,915,000 $ 3,185,000 $ 3,410,000 Ending NWC 3,185,000 3,410,000 2,780,000 NWC cash flow $ (270,000) $ (225,000) $ 630,000
Total cash flow $ 25,912,500 $ 31,446,900 $ 31,869,900
Book value $ 72,845,000 $ 52,020,000 $ 37,145,000
Salvage MV $ 51,000,000 BV 26,520,000 Taxes (9,302,400)
Salvage CF $ 41,697,600
Time Cash flow0 $ (94,915,000)1 25,912,500 2 31,446,900 3 31,869,900 4 68,981,300 5 (1,736,000)6 (4,650,000)
Profitability index 1.1736 Average accounting return 20.79%IRR 19.01%IRR -74.64%MIRR 14.93%NPV $ 16,472,777.67
Year 4 Year 5 Year 6 $ 47,500,000 8,100,000 $ 55,600,000
$ 55,600,000 18,290,000 4,300,000 $ 2,800,000 $ 7,500,000 10,625,000 $ 22,385,000 $ (2,800,000) $ (7,500,000) 8,506,300 (1,064,000) (2,850,000) $ 13,878,700 $ (1,736,000) $ (4,650,000) 10,625,000 - - $ 24,503,700 $ (1,736,000) $ (4,650,000)
$ 2,780,000
$ 2,780,000
$ 27,283,700
$ 26,520,000 $ - $ -
