ppose that an oil well is expected to produce 12, 00,000 tirst production year. However, its subsequent production (yield) is e: decrease by 9% over the previous year's production. The oil wel ven reserve of 10,500,000 barrels. Suppose that the price of oil is expected to be $120 per barrel for the rears. What would be the present worth of the anticipated revenue n interest rate of 10% compounded annually over the next six year uppose that the price of oil is expected to start at $120 per barre e first year, but to increase at the rate of 3% over the previous year hat would be the present worth of the anticipated revenue strea erest rate of 10% compounded annually over the next seven year TO JO

ppose that an oil well is expected to produce 12, 00,000 tirst production year. However, its subsequent production (yield) is e: decrease by 9% over the previous year's production. The oil wel ven reserve of 10,500,000 barrels. Suppose that the price of oil is expected to be $120 per barrel for the rears. What would be the present worth of the anticipated revenue n interest rate of 10% compounded annually over the next six year uppose that the price of oil is expected to start at $120 per barre e first year, but to increase at the rate of 3% over the previous year hat would be the present worth of the anticipated revenue strea erest rate of 10% compounded annually over the next seven year TO JO

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Initial investment of 900 million with operating costs of 40 million/year. The profit in the first year is 130 million, the following year it increases with a gradient of 30 million/year until the 5th year, then remains until the 8th year, and then decreases with a gradient of 20 million/year. If the investment age is 12 years and the residual value is 300 million, evaluate the investment using the PBP and DPBP methods if the prevailing interest rate is 10%/year.
Packaging equipment for Xi Cling Wrap costs $60,000 and is expected to result in end-of-year net savings of $23,000 per year for 3 years. The equipment will have a market value of $10,000 after 3 years. The equipment can be leased for $21,000 per year, payable at the beginning of each year. Xi Cling’s MARR is 10%/yr. Based on an internal rate of return analysis, determine if the packaging equipment should be purchased or leased.
To invest $1,800,000 on this product with annual O&M of $75,000 starting end of year one.The proposal is expected to result in annual benefit in cash flow of $715,000, over nb years period with interest rate of 12 %.nb = 5
Salalah Wind Energy has taken up a new project with an initial investment of 50000 OMR.The expected future cashflow from the project over the next three years will be 22500 OMR, 23500 OMR and 24500 OMR.What is the profitability index if the discount rate is 7 percent? اخترأحد الخيارات a. 1.63 b. 1.48 c. 1.44 d. 1.23 e. None of these
A project has estimated annual cash flows of $95,000 for 4 years and is estimated to cost $260,000. Assume a minimum acceptable rate of return of 10%. Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 a. Determine the net present value of the project.b.
A proposal to reduce oil spill on MX5 has a B-C ratio of 1.5. The conventional annual worth of benefits is P560,000 and the disbenefits is P100,000. What is the first cost of the project if the interest rate is 6% per year and the project is expected to have a 20-year life?
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An investment of S80,000 is expected to generate a net annual income of $27,000 for 5 years. If the study period is 20 years, and assuming this aiternative will be repeated over the study period, what is the present worth of this investment if MARR is 13P O a $14,905 O b. $17,019 OE $4,255 Od S109,668 O e. $29,880
Mike Derr Company expects to earn 8% per year on an investment that will pay $616,000 ten years from now. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Compute the present value of this investment. Future Value 616,000 X Table Factor Present Value
A DSL company has made an equipment investment of $40 million with the expectation that it will be recovered in 10 years. The company has a MARR based on a real rate of return of 12% per year. If inflation is 7% per year, how much must the company make each year (a) in constant-value dollars, and (b) in future dollars, to meet its expectation?
Given the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6 year and Ghe53400 for the 7th year. a. Find the Net Present Value (NPV) b. Detemine the Internal Rate of Return c. Identify three ways in which the Net Present value is superior to the Internal Rate of return as investment criteria
A barrel of oil has a current cost of $85barrel. If general infation is 2.7%year and oil has a real escalation rate of 6%year, what will a barrel of ol cost in actual dollars five years from now? Ol will cost in actual dolars five years from now $ barrel. (Round to the nearest cent)

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