Question
In: Finance
A new gold mining project is expected to operate for 8 years and will require development...
A new gold mining project is expected to operate for 8 years and will require development costs of $200 million at time zero, $160 million at the end of year 1, and $43 million at the end of year 2. Assuming that 100% of the capital costs are to be depreciated using MACRS (.5 year convention) for mining equipment, determine the total allowable depreciation deduction for each year for the project for the entire 0-8 years
Solutions
Expert Solution
Note:
Development cost spent in Year 0 can be claimed using MACRS 5 for next 6 years (1-6 years)
Development cost spent in Year 1 can be claimed using MACRS 5 for next 6 years (2-7 years)
Development cost spent in Year 2 can be claimed using MACRS 5 for next 6 years (3-8 years)
jeff jeffy answered 2 years agoRelated Solutions
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Bullock Gold Mining Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold...
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site. He has estimated that the mine would be productive for eight
years, after which the gold would be completely mined. Dan has
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BULLOCK GOLD MINING Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold...
BULLOCK GOLD MINING
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a
new gold mine in South Dakota. Dan Dority, the company’s geologist,
has just finished his analysis of the mine site. He has estimated
that the mine would be productive for eight years, after which the
gold would be completely mined. Dan has taken an estimate of the
gold deposits to Alma Garrett, the company’s financial officer.
Alma has been asked by Seth to perform an analysis...
Bullock Gold Mining Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold...
Bullock Gold Mining Seth Bullock, the owner of Bullock Gold
Mining, is evaluating a new gold mine in South Dakota. Dan Dority,
the company’s geologist, has just finished his analysis of the mine
site. He has estimated that the mine would be productive for eight
years, after which the gold would be completely mined. Dan has
taken an estimate of the gold deposits to Alma Garrett, the
company’s financial officer. Alma has been asked by Seth to perform
an analysis...
Bullock Gold Mining Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold...
Bullock Gold Mining Seth Bullock, the owner of Bullock Gold
Mining, is evaluating a new gold mine in South Dakota. Dan Dority,
the company’s geologist, has just finished his analysis of the mine
site. He has estimated that the mine would be productive for eight
years, after which the gold would be completely mined. Dan has
taken an estimate of the gold deposits to Alma Garrett, the
company’s financial officer. Alma has been asked by Seth to perform
an analysis...
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have earnings before depreciation and taxes of $125,000 per
year. If the projected is being depreciated over a
3-year term and the firm’s tax rate is 40%, calculate the cashflows
of the project over its estimated life.
The company's management is considering a new 8 year project. The project will require the purchase...
The company's management is considering a new 8 year project.
The project will require the purchase of a new piece of equipment
at a cost of $600,000. The equipment will last eight years and have
no salvage value at the end of its life. This project will generate
incremental net cash revenues eah year duing the assets life in the
amount of $140,000. The company uses straight-line depreciation and
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1....
Flag Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in...
Flag Seth Bullock, the owner of Bullock Gold Mining, is
evaluating a new gold mine in South Dakota. Dan Dority, the
company's geologist, has just finished his analysis of the mine
site. He has estimated that the mine would be productive for eight
years, after which the gold would be completely mined. Dan has
taken an estimate of the gold deposits to Alma Garrett, the
company's financial officer. Alma has been asked by Seth to perform
an analysis of the...
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South...
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company's geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the company's financial officer. Alma has been asked by Seth to perform an analysis of the new mine...
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