Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $23,400,000 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 52,000 tons   Year 2: 94,000 tons   Year 3: 150,000 tons   Year 4: 160,000 tons   Year 5: 180,000 tons   Calculate the depletion expense for the next five years. Do not round intermediate calculations. Year 1 $ Year 2 $ Year 3 $ Year 4 $ Year 5 $ Prepare the journal entry for year one. If an amount box does not require an entry, leave it blank.

A new diamond deposit has been found in northern Alberta. Your researchers have determined that it will cost $2.5 million to purchase the land and prepare it for mining. At the beginning of both the second and third years, another $1 million investment will be required to establish the mining operations. Starting at the end of the second year, the deposit is expected to earn net profits of $3 million, which will be sustained for three years before the deposit is depleted. If the cost of capital is 16%, should your company pursue this venture? Provide calculations to support your decision.

Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area: Cost of new equipment and timbers Working capital required Annual net cash receipts Cost to construct new roads in three years Salvage value of equipment in four years $ 430,000 $ 215,000 $ 150,000* $ 63,000 $ 88,000 "Receipts from sales of ore, less out-of-pocket costs for salaries, utilities, insurance, and so forth. The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is 18%. Required: a. What is the net present value of the proposed mining project? b. Should the project be accepted? Answer is complete but not entirely correct. Complete…

Grey Mining Company has purchased a tract of mineral land for $1,200,000. It is estimated that this tract will yield 80,000 tons of ore with sufficient mineral content to make mining and processing profitable. It is further estimated that 4,000 tons of ore will be mined the first and last year and 8,000 tons every year in between. (Assume 11 years of mining operations.) The land will have a residual value of $80,000.  The company builds necessary structures and sheds on the site at a cost of $134,000. It is estimated that these structures can serve 16 years but, because they must be dismantled if they are to be moved, they have no salvage value. The company does not intend to use the buildings elsewhere. Mining machinery installed at the mine was purchased at a cost of $150,000. Grey Mining estimates that about half of this machinery will still be useful when the present mineral resources have been exhausted but that dismantling and removal costs will just about offset its value at…