Mining Quiz

# # Minerals Economics Numerical MCQs (Answers Tick-Mark)

1. A mining project requires an initial investment of $50,000 and returns $10,000 annually for 7 years. What is the Payback Period?
- ☐ 4 years
- ☑ 5 years
- ☐ 6 years
- ☐ 7 years

2. Calculate the Net Present Value (NPV) of a project with $20,000 initial cost, $5,000 annual cash inflow for 5 years at 10% discount rate. Given (P/A, 10%, 5) = 3.79.
- ☐ $18,950
- ☑ $18,900
- ☐ $19,200
- ☐ $17,800

3. What is the total depreciation per year using Straight-Line Method for equipment costing $100,000 with salvage value $20,000 and life 10 years?
- ☐ $6,000
- ☐ $8,000
- ☑ $8,000
- ☐ $10,000

4. A mine produces 1,000,000 tons per year. If profit per ton is $15, what is the annual profit?
- ☐ $10,000,000
- ☐ $12,000,000
- ☑ $15,000,000
- ☐ $18,000,000

5. If the cost function is $$C_t = 100,000 + 9500D + 0.5D^2$$ and price is $10,000/ton, find profit when D = 5.
- ☐ $5,000
- ☐ $45,000
- ☑ $50,000
- ☐ $55,000

6. Calculate IRR for a project with cash inflows of $50,000/year for 4 years and initial outlay $150,000.
- ☐ 8%
- ☐ 10%
- ☑ 12%
- ☐ 15%

7. A mineral deposit has reserves of 600,000 tons. Production planned at 100,000 tons/year. How many years to deplete?
- ☐ 4 years
- ☑ 6 years
- ☐ 7 years
- ☐ 8 years

8. Total cost = $2 million, annual revenue = $3 million. What is profit margin ratio?
- ☐ 33.3%
- ☑ 50%
- ☐ 66.6%
- ☐ 75%

9. If the discount rate rises, NPV generally:
- ☑ Decreases
- ☐ Increases
- ☐ Stays constant
- ☐ Varies randomly

10. Breakeven point occurs when:
- ☐ Total revenue > Total cost
- ☑ Total revenue = Total cost
- ☐ Total cost > Total revenue
- ☐ Fixed cost = Variable cost

11. Calculate Present Value of $10,000 received in 3 years at 8% discount rate.
- ☐ $7,876
- ☑ $7,938
- ☐ $8,000
- ☐ $7,500

12. Annual worth of $50,000 received after 5 years, given P/A = 3.60 and interest rate 10%:
- ☐ $12,000
- ☑ $13,800
- ☐ $14,000
- ☐ $15,000

13. A mining equipment depreciates 20% per year using declining balance method on $100,000. Depreciation in year 2:
- ☐ $20,000
- ☑ $16,000
- ☐ $12,000
- ☐ $15,000

14. Selling price = $30/ton, production = 3,000,000 ton/year, total cost = $60 million. Compute profit per ton:
- ☐ $10
- ☑ $10
- ☐ $15
- ☐ $20

15. A capital investment project has initial cost $80 million with annual net cash flow $25 million for 5 years. At 15% discount rate, NPV:
- ☐ $20 million
- ☑ $21 million
- ☐ $19 million
- ☐ $15 million

16. Using compound interest, value of $10,000 after 3 years at 12% interest is:
- ☐ $13,500
- ☐ $14,050
- ☑ $14,049
- ☐ $15,000

17. Total cash flow is $500,000 in year 1, increasing 5% yearly. Cash flow in year 3:
- ☐ $550,000
- ☐ $552,000
- ☑ $551,250
- ☐ $540,000

18. The payback period for an initial investment of $200,000 and inflow $40,000/year is:
- ☑ 5 years
- ☐ 4 years
- ☐ 6 years
- ☐ 7 years

19. Cost recovery period for equipment costing $120,000 with $30,000 annual depreciation is:
- ☐ 2 years
- ☑ 4 years
- ☐ 5 years
- ☐ 6 years

20. Calculate total fixed cost if total cost is $1,000,000 at output 10,000 ton and variable cost is $70/ton.
- ☐ $700,000
- ☑ $300,000
- ☐ $200,000
- ☐ $400,000

21. Operating cost per ton if total operating cost is $5M for 250,000 tons:
- ☐ $12
- ☑ $20
- ☐ $18
- ☐ $25

22. The IRR of a mining project with initial outlay $1M and cash inflows $300,000 for 5 years is approximately:
- ☐ 12%
- ☑ 14%
- ☐ 16%
- ☐ 18%

23. If the MARR is 10% and a project’s IRR is 15%, the project is:
- ☑ Feasible
- ☐ Not feasible
- ☐ Breakeven
- ☐ Unknown

24. Calculate annual operational cost for mine producing 2 million tons at $10/ton cost.
- ☐ $15 million
- ☑ $20 million
- ☐ $18 million
- ☐ $22 million

25. Estimate total revenue from 300,000 tons at $40/ton price:
- ☐ $12 million
- ☑ $12 million
- ☐ $15 million
- ☐ $10 million

26. Calculate NPV of $10,000 for 4 years, 8% rate, P/A factor = 3.312:
- ☐ $33,120
- ☑ $33,120
- ☐ $30,000
- ☐ $28,500

27. Capital recovery cost for $500,000 at 10% interest over 10 years (P/A=6.145):
- ☐ $81,167
- ☑ $81,145
- ☐ $80,000
- ☐ $90,000

28. A mining project cost $100,000 and produces revenue $25,000/year for 6 years. Find payback period:
- ☐ 3 years
- ☐ 4 years
- ☑ 4 years
- ☐ 5 years

29. Total profit if revenue $15M, fixed cost $5M, variable cost $4/ton and production is 2 million tons:
- ☐ $2 million
- ☐ $6 million
- ☑ $2 million
- ☐ $3 million

30. Calculate breakeven production if fixed cost is $1 million, variable cost $12/ton, and price $20/ton:
- ☐ 80,000 tons
- ☑ 125,000 tons
- ☐ 100,000 tons
- ☐ 200,000 tons

31. At 12%, the present worth of $10,000 to be received after 5 years is approximately:
- ☐ $5,672
- ☑ $5,674
- ☐ $6,000
- ☐ $5,000

32. Operating ratio for mine with cost $25M and revenue $30M is:
- ☐ 0.85
- ☑ 0.83
- ☐ 0.90
- ☐ 0.80

33. Return on investment (ROI) if net profit $700,000 and investment is $5 million:
- ☐ 14%
- ☐ 12%
- ☑ 14%
- ☐ 16%

34. Total variable cost if production is 500,000 tons and variable cost per ton $6:
- ☐ $2.5 million
- ☑ $3 million
- ☐ $3.5 million
- ☐ $2 million

35. A capital investment of $60,000 has a salvage value of $10,000 in 4 years. Straight-line depreciation:
- ☐ $12,500 per year
- ☐ $15,000 per year
- ☑ $12,500 per year
- ☐ $10,000 per year

36. Profit margin if revenue is $50M and cost $38M:
- ☐ 22%
- ☑ 24%
- ☐ 25%
- ☐ 27%

37. Annual revenue if tonnage 1 million and price/ton $100:
- ☐ $80 million
- ☑ $100 million
- ☐ $90 million
- ☐ $70 million

38. Breakeven price if fixed cost $4 million, variable cost $15/ton and production 300,000 tons:
- ☐ $18.5
- ☐ $22.5
- ☑ $28.3
- ☐ $30

39. Profit at production 100,000 tons with revenue/ton $40 and cost/ton $25:
- ☐ $1.5 million
- ☑ $1.5 million
- ☐ $3 million
- ☐ $2.5 million

40. Depreciation expense (double declining) for $80,000 asset year 1 at 25% rate:
- ☐ $10,000
- ☐ $16,000
- ☑ $20,000
- ☐ $25,000

41. Calculate profit if revenue $120,000, fixed cost $30,000, variable cost $20 per ton and production 3,000 tons:
- ☐ $10,000
- ☑ $30,000
- ☐ $20,000
- ☐ $40,000

42. Total cost if production 200,000 tons, fixed cost $60 million, variable $10/ton:
- ☐ $62 million
- ☐ $66 million
- ☑ $62 million
- ☐ $70 million

43. NPV for cash flows $100,000 annually for 4 years at 8%, initial $300,000:
- ☐ $15,000
- ☑ $33,000
- ☐ $40,000
- ☐ $20,000

44. IRR for $250,000 invested and $70,000 annual return for 5 years approximately:
- ☐ 15%
- ☑ 17%
- ☐ 20%
- ☐ 22%

45. Operating cost per ton if cost $5M and production 500,000 tons:
- ☐ $8
- ☐ $10
- ☑ $10
- ☐ $15

46. Annual cost for equipment bought at $200,000 with salvage value $40,000 over 6 years straight line:
- ☐ $20,000
- ☑ $26,666
- ☐ $33,333
- ☐ $40,000

47. Breakeven point (units) if fixed cost $100,000 and contribution margin per unit $25:
- ☐ 4,000
- ☑ 4,000
- ☐ 5,000
- ☐ 3,000

48. Calculate ROI if net profit is $60,000 and investment is $250,000:
- ☐ 22%
- ☐ 24%
- ☑ 24%
- ☐ 26%

49. Annual depreciation using sum-of-years digits for $120,000 asset, salvage $20,000, life 5 years in 2nd year:
- ☐ $22,000
- ☑ $32,000
- ☐ $40,000
- ☐ $24,000

50. Total profit if revenue $100M, variable costs $50M, fixed costs $20M:
- ☐ $25M
- ☑ $30M
- ☐ $35M
- ☐ $40M

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