What is total gross income until mine is totally depleted

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Question - A gold mine was purchased for $10 million. It has an anticipated gross income of $5.0 million per year for years 1 to 5 and $3.0 million per year after year 5 Assume that depletion charges do not exceed 50% of taxable income. Compute annual depletion amounts for the mine.

(a) How long will it take to recover the initial investment at-0%? (% depletion 15%).

(b) What is the total gross income until the mine is totally depleted?

Reference no: EM132183967

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