A Coal Company Invests $16 Million in a Mine Estimated

Multiple Choice

A coal company invests $16 million in a mine estimated to have 20 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tons of coal are extracted and sold. What is the depletion expense for the first year?

A) $800,000
B) $320,000
C) $80,000
D) Cannot be determined from the information provided.