Final answer:
The question asks to calculate the level annual revenue for an investor seeking a 5.5% return with principal recovery via a 4% sinking fund over 17 years. It involves financial concepts like present value of an annuity and sinking funds, making it an advanced college-level mathematics problem.
Step-by-step explanation:
The student asks what the level annual revenue should be for an investor who pays $475,000 for a mine that will produce revenue for 17 years to achieve a 5.5% annual return, with the principal being recovered through a sinking fund earning 4% per year. To solve this, we must calculate the annual revenue required to yield the investor's expected return and then consider the necessary contributions to the sinking fund to repay the principal.
To find the level of annual revenue, we first need to calculate the present value of an annuity at the 5.5% rate over 17 years. Then, we must determine the sinking fund payment that will accumulate to $475,000 over 17 years at a 4% return. The combination of these values will yield the level annual revenue required.
As this involves understanding concepts like present value of an annuity, sinking funds, and rates of return, it is an advanced financial problem appropriate for a college-level finance or business course.