Questions
Question: Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio, Pennsylvania,...

Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio, Pennsylvania, West Virginia, and Kentucky. The company operates deep mines as well as strip mines. Most of the coal mined is sold under contract, with excess production sold on the spot market. The coal mining industry, especially high-sulfur coal operations such as Bethesda, has been hard-hit by environmental regulations. Recently, however, a combination of increased demand for coal and new pollution reduction technologies has led to an improved market demand for high-sulfur coal. Bethesda has just been approached by Mid-Ohio Electric Company with a request to supply coal for its electric generators for the next four years. Bethesda Mining does not have enough excess capacity at its existing mines to guarantee the contract. The company is considering opening a strip mine in Ohio on 5,000 acres of land purchased 10 years ago for $5.4 million. Based on a recent appraisal, the company feels it could receive $7.3 million on an after-tax basis if it sold the land today. Strip mining is a process where the layers of topsoil above a coal vein are removed and the exposed coal is removed. Some time ago, the company would simply remove the coal and leave the land in an unusable condition. Changes in mining regulations now force a company to reclaim the land; that is, when the mining is completed, the land must be restored to near its original condition. The land can then be used for other purposes. As they are currently operating at full capacity, Bethesda will need to purchase additional equipment, which will cost $43 million. The equipment will be depreciated on a seven-year MACRS schedule. The contract only runs for four years. At that time the coal from the site will be entirely mined. The company feels that the equipment can be sold for 60 percent of its initial purchase price. However, Bethesda plans to open another strip mine at that time and will use the equipment at the new mine. The contract calls for the delivery of 500,000 tons of coal per year at a price of $60 per ton. Bethesda Mining feels that coal production will be 750,000 tons, 810,000 tons, 830,000 tons, and 720,000 tons, respectively, over the next four years. The excess production will be sold in the spot market at an average of $48 per ton, Variable costs amount to $21 per ton and fixed costs are $3.7 million per year. The mine will require a net working capital investment of 5 percent of sales. The net working capital (“NWC”) will be built up in the year prior to the sales. Bethesda will be responsible for reclaiming the land at termination of the mining. This will occur in Year 5. The company uses an outside company for reclamation of all the company’s strip mines. It is estimated the cost of reclamation will be $3.9 million. After the land is reclaimed, the company plans to donate the land to the state for use as a public park and recreation area as a condition to receive the necessary mining permits. This will occur in Year 5 and result in a charitable expense deduction of $7.3 million. Bethesda faces a 38 percent tax rate and has a 12 percent required return on new strip mine projects. Assume a loss in any year will result in a tax credit. You have been approached by the president of the company with a request to analyze the project. Calculate the payback period, profitability index, net present value, and internal rate of return for the new strip mine. Should Bethesda Mining take the contract and open the mine? Required: 1. To analyze this project, we must calculate the incremental cash flows generated by the project. Since net working capital is built up ahead of sales, the initial cash flow depends in part on this cash outflow. Therefore you need to begin your analysis by calculating your sales forecast. Prepare the sales forecast in tab 1 of the excel workbook. 2. Calculate the initial cash outflow for this project; use tab 1 to calculate your answer. 3. Use tab 2 in the excel workbook to calculate your operating cash flows for this project for years 1 through 6. 4. You will also need to calculate the net working capital cash flow each year, and the cash flow for the sale of the equipment. Calculate these amounts for this project in tab 3 of the excel workbook in Engage 5. Finally, using the net cash flows calculated above (operating cash flow, net working capital and after-tax salvage value), calculate the following for this project: a. Payback Period b. Profitability Index c. IRR d. NPV e. Recommendation – should the company accept or reject the project? Explain your recommendation (why should they accept or reject?)

1. Calculate the Sales Forecast for this Project:

Y ear 1 Year 2 Year 3 Year 4

Tons produced

Contract sales price

Spot sales price

Contract sales

Spot sales

Total Sales

2. Cash Flow Today:

Equipment

Land

NWC

Total -

1. Calculate the Sales Forecast for this Project:

Year 1 Year 2 Year 3 Year 4

Tons produced

Contract sales price

Spot sales price

Contract sales

Spot sales

Total Sales

2. Cash Flow Today:

Equipment Land

NWC

Total

3. Calculate the Operating Cash Flows for years 1 to 6

Tons produced

Year 1 Year 2 Year 3 Year 4 Year 5

Sales

Variable costs

Fixed costs

Depreciation

Earnings before tax

Tax

Net Income

Operating Cash Flow

Depreciation Calculation: -

Rate* Depreciation

Yr 1 14.29%

Yr 2 24.49%

Yr 3 17.49%

Yr 4 12.49%

Yr 5 8.93%

Yr 6 8.92%

Yr 7 8.93%

Yr 8 4.46%

100.00%

4. Calculate the Net Working Capital Cash Flow

Year 1 Year 2 Year 3 Year 4

Beginning NWC

Ending NWC

NWC Cash Flow

Market value of equipment:
Book value of equipment:
Gain/(Loss) on equipment:
Taxes on sale
After-tax salvage value:
Net cash flow for sale of equipment:
5. Calculate the net cash flows for years 0 through 6
Time Cash Flow
0
1
2
3
4
5
6
5a - 5d - Calculate the following:
Payback Period =
Profitability Index =
IRR =
NPV =
5e. Recommendation

In: Finance

Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio, Pennsylvania, West...

Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio, Pennsylvania, West Virginia, and Kentucky. The company operates deep mines as well as strip mines. Most of the coal mined is sold under contract, with excess production sold on the spot market. The coal mining industry, especially high-sulfur coal operations such as Bethesda, has been hard-hit by environmental regulations. Recently, however, a combination of increased demand for coal and new pollution reduction technologies has led to an improved market demand for high-sulfur coal. Bethesda has just been approached by Mid-Ohio Electric Company with a request to supply coal for its electric generators for the next four years. Bethesda Mining does not have enough excess capacity at its existing mines to guarantee the contract. The company is considering opening a strip mine in Ohio on 5,000 acres of land purchased 10 years ago for $5.4 million. Based on a recent appraisal, the company feels it could receive $7.3 million on an after-tax basis if it sold the land today. Strip mining is a process where the layers of topsoil above a coal vein are removed and the exposed coal is removed. Some time ago, the company would simply remove the coal and leave the land in an unusable condition. Changes in mining regulations now force a company to reclaim the land; that is, when the mining is completed, the land must be restored to near its original condition. The land can then be used for other purposes. As they are currently operating at full capacity, Bethesda will need to purchase additional equipment, which will cost $43 million. The equipment will be depreciated on a seven-year MACRS schedule. The contract only runs for four years. At that time the coal from the site will be entirely mined. The company feels that the equipment can be sold for 60 percent of its initial purchase price. However, Bethesda plans to open another strip mine at that time and will use the equipment at the new mine. The contract calls for the delivery of 500,000 tons of coal per year at a price of $60 per ton. Bethesda Mining feels that coal production will be 750,000 tons, 810,000 tons, 830,000 tons, and 720,000 tons, respectively, over the next four years. The excess production will be sold in the spot market at an average of $48 per ton, Variable costs amount to $21 per ton and fixed costs are $3.7 million per year. The mine will require a net working capital investment of 5 percent of sales. The net working capital (“NWC”) will be built up in the year prior to the sales. Bethesda will be responsible for reclaiming the land at termination of the mining. This will occur in Year 5. The company uses an outside company for reclamation of all the company’s strip mines. It is estimated the cost of reclamation will be $3.9 million. After the land is reclaimed, the company plans to donate the land to the state for use as a public park and recreation area as a condition to receive the necessary mining permits. This will occur in Year 5 and result in a charitable expense deduction of $7.3 million. Bethesda faces a 38 percent tax rate and has a 12 percent required return on new strip mine projects. Assume a loss in any year will result in a tax credit. You have been approached by the president of the company with a request to analyze the project. Calculate the payback period, profitability index, net present value, and internal rate of return for the new strip mine. Should Bethesda Mining take the contract and open the mine? Required: 1. To analyze this project, we must calculate the incremental cash flows generated by the project. Since net working capital is built up ahead of sales, the initial cash flow depends in part on this cash outflow. Therefore you need to begin your analysis by calculating your sales forecast. Prepare the sales forecast in tab 1 of the excel workbook. 2. Calculate the initial cash outflow for this project; use tab 1 to calculate your answer. 3. Use tab 2 in the excel workbook to calculate your operating cash flows for this project for years 1 through 6. 4. You will also need to calculate the net working capital cash flow each year, and the cash flow for the sale of the equipment. Calculate these amounts for this project in tab 3 of the excel workbook in Engage 5. Finally, using the net cash flows calculated above (operating cash flow, net working capital and after-tax salvage value), calculate the following for this project: a. Payback Period b. Profitability Index c. IRR d. NPV e. Recommendation – should the company accept or reject the project? Explain your recommendation (why should they accept or reject?)

1. Calculate the Sales Forecast for this Project:

Y ear 1 Year 2 Year 3 Year 4

Tons produced

Contract sales price

Spot sales price

Contract sales

Spot sales

Total Sales

2. Cash Flow Today:

Equipment

Land

NWC

Total -

1. Calculate the Sales Forecast for this Project:

Year 1 Year 2 Year 3 Year 4

Tons produced

Contract sales price

Spot sales price

Contract sales

Spot sales

Total Sales

2. Cash Flow Today:

Equipment Land

NWC

Total

3. Calculate the Operating Cash Flows for years 1 to 6

Tons produced

Year 1 Year 2 Year 3 Year 4 Year 5

Sales

Variable costs

Fixed costs

Depreciation

Earnings before tax

Tax

Net Income

Operating Cash Flow

Depreciation Calculation: -

Rate* Depreciation

Yr 1 14.29%

Yr 2 24.49%

Yr 3 17.49%

Yr 4 12.49%

Yr 5 8.93%

Yr 6 8.92%

Yr 7 8.93%

Yr 8 4.46%

100.00%

4. Calculate the Net Working Capital Cash Flow

Year 1 Year 2 Year 3 Year 4

Beginning NWC

Ending NWC

NWC Cash Flow

Market value of equipment:
Book value of equipment:
Gain/(Loss) on equipment:
Taxes on sale
After-tax salvage value:
Net cash flow for sale of equipment:
5. Calculate the net cash flows for years 0 through 6
Time Cash Flow
0
1
2
3
4
5
6
5a - 5d - Calculate the following:
Payback Period =
Profitability Index =
IRR =
NPV =
5e. Recommendation:
                   -  

In: Finance

You bought a new car and decided to buy an extended warranty a day later. The...

You bought a new car and decided to buy an extended warranty a day later. The dealer offers you two alternative payment plans. The first plan requires a $2,000 immediate up-front payment. The second plan requires you to make monthly payments of $100.00, payable at the end of each month for 2 years. What nominal annual interest rate is built into the monthly payment plan?

17.16%

19.86%

15.41%

18.16%

Cannot be determined

In: Finance

1. Describe, in your own words, how you created your buffer solution. Be sure to reference...

1. Describe, in your own words, how you created your buffer solution. Be sure to reference specific amounts of reagents that you would use

2. What would the pH of the buffer you built above be if you added 10.0 mL of 10.0 M HCl to 100.00 mL of your buffer? (HINT: Your pure buffer initially contains the concentrations of acetic acid and sodium acetate determined in Step 9 above.)

pH: __________

In: Chemistry

Q: (LU decomposition) Find the LU decomposition of A = [-3 2 5 1; 12 -4...

Q: (LU decomposition) Find the LU decomposition of A = [-3 2 5 1; 12 -4 -20 -2; -6 0 15 1; -9 6 35 4]. You can use the compact method which works within a single matrix or you can build L and U separately. State L and U explicitly, and verify (in Matlab) that A = L*U. Hint: Matlab's built-in lu function isn't useful, since it pivots.

In: Advanced Math

Please re-order the steps below to accurately represent the events that occur during transcription and translation....

Please re-order the steps below to accurately represent the events that occur during transcription and translation.

  1. mRNA is sent out into the cytoplasm where it will bind with a ribosome

  2. Helicase "unzips" DNA by breaking the hydrogen bonds between base pairs

  3. The ribosome reads the mRNA 3-letters at a time

  4. The tRNA that matches the code brings in the Amino Acids to add to the protein being built

  5. RNA Polymerase starts building mRNA from 5' to 3' and replaces Thymine with Uracil

In: Biology

Data were collected on number of credit hours earned from a random sample of 40 JMU...

  1. Data were collected on number of credit hours earned from a random sample of 40 JMU students. The mean was 57.2 and the standard deviation was 8.9. Conduct a test to determine whether the true mean number of credit hours earned differs from 55.0, allowing a Type I error rate of 0.05. Assume that the distribution of the number of credit hours earned is normal. Show your full work. You may not use your calculator’s built-in function.

In: Statistics and Probability

Alex the Builder, used Joe’s elbow joints on a job in Westport. Alex’s employee, Mark, was...

Alex the Builder, used Joe’s elbow joints on a job in Westport. Alex’s employee, Mark, was testing the plumbing by turning on the hot water full blast. The joint broke and a part of it lodged in Mark’s eye. In addition, his face was scalded by the hot water. The entire first floor of the newly built house had water damage because several other of Joe’s elbow joints failed.

Explain how Mark’s can seek damages from Alex and Joe.

In: Operations Management

Question Workspace Check My Work Your uncle the banker offers to lend you $25,000 to start...

Question Workspace Check My Work Your uncle the banker offers to lend you $25,000 to start a new business. You will have to make a payment of $7,000 at the end of each of the next 3 years plus a final payment of $10,000 at the end of Year 4. What annual interest rate is built into this loan?

a. 10.13%

b. 9.74%

c. 9.01%

d. 8.66%

e. 9.37%

Anybody can solve this question via HP 10bll+ calculator?

In: Finance

Using C++ Write a program that reads a text from the keyboard until the user presses...

Using C++

Write a program that reads a text from the keyboard until the user presses the “Enter” key. Your program must count the number of uppercase alphabets (A through Z), lowercase alphabets (a through z), digits (0 through 9) and any other characters. The other character count value should NOT include the “Enter” key. Display the count on the screen. You must use the in-built C++ character I/O functions in this program.

In: Computer Science