An oil and gas producing company owns 40,000 acres of land in a southeastern state. It operates 650 wells which produce 20,000 barrels of oil per year and 1.2 million cubic feet of natural gas per year. The revenue from the oil is $2,000,000 per year and for natural gas the annual revenue is $560,000 per year. What bid should be made to purchase this property if the potential buyer is hoping to make 17% per year on his investment over a period of 9 years.(Note: There are no graphs or diagrams in the image.) # Discrete Compounding at 17% Interest RateThis table demonstrates various financial factors used in discrete compounding at an interest rate of 17%. These factors are crucial for financial calculations involving single payments and uniform series. Below, the table is divided into sections for Single Payment and Uniform Series, with specific factors for finding future and present values.## Single Payment- **Compound Amount Factor** - **To Find F Given P (F/P)** - The factor used to calculate the future value $ F $ of a present amount $ P $. - **To Find P Given F (P/F)** - The factor used to calculate the present value $ P $ of a future amount $ F $.## Uniform Series- **Compound Amount Factor** - **To Find F Given A (F/A)** - The factor for calculating the future value $ F $ of an annuity $ A $.- **Present Worth Factor** - **To Find P Given A (P/A)** - The factor for calculating the present value $ P $ of an annuity $ A $.- **Sinking Fund Factor** - **To Find A Given F (A/F)** - The factor for calculating the annuity $ A $ needed to achieve a future sum $ F $.- **Capital Recovery Factor** - **To Find A Given P (A/P)** - The factor for calculating the annuity $ A $ recovered from a present value $ P $.### Table Entries\[\begin{array}{cccccc}\hlineN & \text{F/P} & \text{P/F} & \text{F/A} & \text{P/A} & \text{A/F} & \text{A/P} \\\hline1 & 1.1700 & 0.8547 & 1.0000 & 0.8547 & 1.0000 & 1.1700 \\2 & 1.3689 & 0.7305 & 2.1700 & 1.5852 & 0.4608 & 0.6308 \\3 & 1.6016 & 0.6244 & 3.5389 & 2.2096 & 0.2826 & 0.4526

Given that, Revenue from oil is $2000000 per year Revenue from natural gas is $560000 per year…

An oil and gas producing company owns 40,000 acres of land in a southeastern state. It operates 650 wells which produce 20,000 barrels of oil per year and 1.2 million cubic feet of natural gas per year. The revenue from the oil is $2,000,000 per year and for natural gas the annual revenue is $560,000 per year. What bid should be made to purchase this property if the potential buyer is hoping to make 17% per year on his investment over a period of 9 years.

An oil and gas producing company owns 40,000 acres of land in a southeastern state. It operates 650 wells which produce 20,000 barrels of oil per year and 1.2 million cubic feet of natural gas per year. The revenue from the oil is $2,000,000 per year and for natural gas the annual revenue is $560,000 per year. What bid should be made to purchase this property if the potential buyer is hoping to make 17% per year on his investment over a period of 9 years.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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