A landowner is looking to develop a coal mine on their property. She determines that a surface mine is the best option, as the coal seam she is targeting is close to the surface. The cost to start the mine is $20 million and the annual cost to operate is $16 million. She estimates that they can remove 450,000 tons of coal a year and sell the coal for $38.50 per ton. How long will it take before she is able to pay off her investment and start to make a profit?

Respuesta :

Answer: It will take her 15 years to repay the loan and start making profit.

Explanation: Kindly see attached schedule.

From the schedule, you will see that it will take her 15 years to repay the loan and she will start making profit in the 16th year.

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