Business, 27.12.2020 15:30 Serenitybella

Montana Mining Co. (MMC) paid 200 million for the right to explore and extract rare metals from land owned by the state of Montana. To obtain the rights, MMC agreed to restore the land to a suitable condition for other uses after its exploration and extraction activities. MMC incurred exploration and development cost of $60 million. MMC has a credit-adjusted risk free interest rate of 7%. It estimates the possible cash flows for restoring the land, 3 years after extraction activities begin, as follows: Cash Outflow Probability

$10 million 60%
$30 million 40%

The asset retirement obligation (rounded) that should be recognized at the beginning of the extraction activities is:
The asset retirement obligation (rounded) that should be reported on the balanace sheet one year after activities begin is:

Answers: 3

Show answers

Answers

Answer from: phelanpearson3995

A. $14.7 million

B.$15.7 million

Explanation:

A. Calculation for The asset retirement obligation that should be recognized at the beginning of the extraction activities

PV of the expected cash flows=0.81630 *[(.60 *$10 million) + (.40 $30 million)]

PV of the expected cash flows=0.81630*($6 million+$12 million)

PV of the expected cash flows=0.81630*$18 million

PV of the expected cash flows=$14,693,400

PV of the expected cash flows=$14.7 million (rounded)

Therefore The asset retirement obligation that should be recognized at the beginning of the extraction activities is:$14.7 million

B. Calculation for The asset retirement obligation that should be reported on MMC's balance sheet one year after the extraction activities begin

Asset retirement obligation=$14.7 million ×(1+.07)

Asset retirement obligation=$14.7 million × 1.07

Asset retirement obligation = $15.7 million (rounded)

Therefore The asset retirement obligation that should be reported on the balanace sheet one year after activities begin is:$15.7 million

Answer from: Quest

$527.7.if the following was the question $527.7 is the answer.students who are trying to raise funds have an agreement with a local pizza chain. the chain has agreed to sell them pizzas at a discount, which the students can then resell to families in the local community for a profit. it is expected that of the 500 families in the community, at most 70% will buy pizza. based on a survey of their personal preferences, the students believe that they should order no more than 120 cheese pizzas, no more than 150 pepperoni pizzas, and no more than 100 vegetarian pizzas. they also want to make sure that at least 20% of the total pizzas are cheese and at least 50% of the pizzas are pepperoni. they make a profit of $1.45, $1.75, and $1.98, respectively, for each cheese, pepperoni, and vegetarian pizza they resell. how many pizzas of each type should they buy?

Answer from: Quest

Lol yes , why are you asking ?

Another question on Business

Business, 22.06.2019 05:00

What is a sort of auction for stocks in which traders verbally submit their offers?

Answers: 3

Answer

Business, 22.06.2019 06:00

When an interest-bearing note comes due and is uncollectible, the journal entry includes debitingaccounts receivable and crediting notes receivable and interest revenue.accounts receivable and crediting interest revenue.notes receivable and crediting accounts receivable and interest revenue.notes receivable and crediting accounts receivable.

Answers: 3

Answer

Business, 22.06.2019 10:30

How are interest rates calculated by financial institutions? financial institutions generally calculate interest as (1) interest or (.

Answers: 1

Answer

Business, 22.06.2019 11:30

Florence invested in a factory requiring. federally-mandated reductions in carbon emissions. how will this impact florence as the factory's owner? a. her factory will be worth less once the upgrades are complete. b. her factory will likely be bought by the epa. c. florence will have to invest a large amount of capital to update the factory for little financial gain. d. florence will have to invest a large amount of capital to update the factory for a large financial gain.

Answers: 1

Answer

You know the right answer?

Montana Mining Co. (MMC) paid 200 million for the right to explore and extract rare metals from land...

Questions