A working interest in an oil well is for sale. The well is expected to generate the following cash flows at the end of each month shown. What would you be willing to pay for the working interest if money has a time value of 0.4% per month? End of Month Net Cash Flow SM

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A: The amount of interest paid is calculated as shown below.

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A: Following is the answer to the given question

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A: Therefore, the present worth is $57,595.10.

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A: Interest Rate = 12%/12 = 1% per month Cash Flow in month one = 4000 Cash Flow in month two = 3925…

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