Bethesda mining.xlsx - Case Study Bethesda Mining Company Aaiman Ghlan Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio

Bethesda mining.xlsx - Case Study Bethesda Mining Company...

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Case Study: Bethesda Mining Company Aaiman Ghlan Year Yr. 0 Land ($7,300,000) Additional Equipment ($49,000,000) Total Sales Revenue from Sales Schedule $ (51,000,000) Total Variable Cost from Cost Schedule $ (21,750,000) Total Fixed Cost ($4,200,000) Depreciation ($10,220,000) Earnings before Tax $ - Tax @ 38% of EBT $ - Net Earnings $ - Add back Depreciation $ - $ - Total cash flow ($143,470,000) Salvage value of equipment ($14,290,000) Tax @38% of (Salvage Value minus Book Value) $ - Operating Cash Flow plus Salvage Cassh Flows ($138,680,200) After tax reclamation cost $ (3,900,000) Tax Benefit of Charitable deduction $ (730,000) Final Cash Flow ($301,070,200) Discount at 12% NPV = $266,717,322 Bethesda Mining is a midsized coal mining company with 20 mines located in Ohio, Pennsylvania, coal mining industry, especially high-sulfur coal operations such as Bethesda, has been hard-hit by sulfur coal. Bethesda has just been approached by Mid-Ohio Electric Company with a request to su considering opening a strip mine in Ohio on 5000 acres of land purchased 10 years ago for $5.4 mi Strip mining is a process where the layers of topsoil above a coal vein are removed and the exposed reclaim the land; that is, when the mining is completed, the land must be restored to near its origina $49 million. The equipment will be depreciated on a seven-year MACRS schedule. The contract ru Bethesda plans to open another strip mine at that time and will use the equipment at the new mine. The contract calls for delivery of 500,000 tons of coal per year at a price of $70 per ton. Bethesda M market at an average of $64 per ton. Variable costs amount to $29 per ton, and fixed costs are $4.2 Bethesda will be responsible for reclaiming the land at the termination of the mining. This will occu park and recreation area. This will occur in year 5 and result in a charitable expense deduction of $7 You have been approached by the president of the company with a request to analyze the project. C

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