Calculate the average cash flow from the mine

Assignment Help Financial Management

Reference no: EM131611892

Silver mine can yield 14,000 ounces of silver at a variable cost of $32 per ounce. The fixed costs of operating the mine are $56,000 per year. In half the years, silver can be sold for $48 per ounce; in the other years, silver can be sold for only $24 per ounce. Ignore taxes.

a. What is the average cash flow you will receive from the mine if it is always kept in operation and the silver always is sold in the year it is mined? (Do not round intermediate calculations.)

Average cash flow $

b. Now suppose you can shut down the mine in years of low silver prices. Calculate the average cash flow from the mine. Assume fixed costs are incurred only if the mine is operating. (Do not round intermediate calculations.)

Average cash flow $

Reference no: EM131611892

Questions Cloud

Calculate total surplus : The figure shows the competitive market for cellphones. Shade in the consumer surplus and label it.

Explain the aspects of expansionary and contractionary : Explain the aspects of expansionary and contractionary fiscal policy. During which phases of the business cycle would each be appropriate?

Investments between a risk-free asset and two stocks : Jimmy has equally split his investments between a risk-free asset and two stocks. What must the beta be for Stock B,

Zebra pen or two plastic pilot pens : In a study, students agreed to fill out a short questionnaire for $1.50. At the end of the survey, respondents were offered a chance to exchange their $1.50.

Calculate the average cash flow from the mine : Now suppose you can shut down the mine in years of low silver prices. Calculate the average cash flow from the mine.

Assess the probable difficulties and risks associated : Assess the probable difficulties and risks associated with using a public infrastructure such as the Internet as part of a business solution.

Why do you think restaurants do not use the market price : Explain why the allocation method used by each restaurant in Problem is fair or not fair.

Position dell to maximize shareholder value : Explain how a transportation economists strategy can effectively position Dell to maximize shareholder value.

How are authentication and authorization alike : How are authentication and authorization alike and how are they different? What is the relationship, if any, between the two?

User Account

All Pages