New Life Metal Recycling has just been given the opportunity to salvage scrap me

Question

New Life Metal Recycling has just been given the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site to New Life at no cost. New Life intends to extract scrap metal at the site for 24 months, and then will clean up the site, return the land to usable condition, and sell it to a developer, Projected costs associated with the project follow: Ignore time value of money. Assuming that New Life expects to salvage 50000 tonnes of metal from the site, what is the total project life-cycle cost? Suppose New Life can sell the metal for $150 per tone and wants to earn a profit (before taxes) of $40 per tonne. At what price must New Life sell the land at the end of the project to achieve its target profit per tonne? Now Suppose New Life can only sell the metal for $140 per tone and the land at $100000 less than what you calculated in requirement 2. If New Life wanted to maintain the same mark-up percentage on total project life-cycle cost as in requirement 2, by how much would it have to reduce its total project life cycle cost?

Explanation / Answer

Answer:1

Answer:2

Answer:3

Variable cost per ton Number of tons Variable project cost 100 50000 5000000 Particulars Cost per month No. of Months Fixed Project costs Metal extraction and Processing 4000 24 96000 Rent on Temporary buildings 2000 27 54000 Administration 5000 27 135000 Clean up 30000 3 90000 Variable cost: Metal extraction and Processing 5000000 Fixed costs: Metal extraction and Processing 96000 Rent on Temporary buildings 54000 Administration 135000 Clean up 90000 Land Restoration 475000 Cost of selling land 150000 Total life cycle costs 6000000

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