Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 7

A coal mine expected to contain 6.5 million tons of coal was purchased at a cost of $30 million. One million tons of coal for steel-making are produced this year. The gross income for this coal is $150,000,000, and operating costs (excluding depletion expenses) are $1,850,000. If you know that coal has a 10% depletion allowance, what will be the depletion allowance
(a) Cost depletion
(b) Percentage depletion