8:38 PM ezto mheducation.com umbus State Community College Two-year degrees and

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8:38 PM ezto mheducation.com umbus State Community College Two-year degrees and Ch 10 H NANCE 10 Homework prev estion #4 (of 5) save & next 1.00 points Problem 10.24 Project Options (LOA) A silver mine can yield 16,000 ounces of silver at a variable cost of S36 per ounce. The fixed costs of operating the mine are S48,000 per year. In half the years, silver can be sold for $52 per ounce; in the other years, silver can be sold for only $26 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? 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. Average cash flow check my work View Hint A1 references ebook & resources

Explanation / Answer

sales= 16000*52= 832000 or 16000*26=416000
variable cost= 16000*36= 576000
fixed cost= 48000
cash flow= 832000-576000-48000= 208000 or 416000-576000- 48000= -208000
a. average = 0
b. if it is closed only fixed cos will be incurred=48000

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