A Silver Mine Can Yield 10,000 Ounces of Silver at a Variable

question 91

Essay

A silver mine can yield 10,000 ounces of silver at a variable cost of $8 per ounce. The fixed costs of operating the mine are $10,000 per year. In half the years, silver can be sold for $12 per ounce; in the other years, silver can be sold for only $6 per ounce. Ignoring taxes, what is the average cash flow you will receive from the mine if it is always kept in operation and the silver is always sold in the year it is mined? What happens to the average cash flow from the mine if you can shut down the mine in years of low silver prices?

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Definitions:

Organizational Communication

The process by which individuals within an organization exchange information, ideas, and meanings through various channels and media.

Vertical Communication

The flow of information between different levels within an organization, such as from management to employees or vice versa.

Grapevine

Informal communication network within an organization that is used for the sharing of rumors and unofficial information.

Filtered

Refers to the process of screening or sorting information or data based on specific criteria to streamline focus or understanding.