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The cost of erecting an oil well is Rs. 1, 50, 00, 000. The annual equivalent Income of oil well is Rs. 30, 00,000. The salvage value after its useful life of 10 years is Rs. 2,00,000. Assuming an interest rate of 10 per cent compounded annually, find out whether the erection of the well is financially feasible, based on future-worth method.

The cost of erecting an oil well is Rs. 1, 50, 00, 000. The annual equivalent Income of oil well is Rs. 30, 00,000. The salvage value after its useful life of 10 years is Rs. 2,00,000. Assuming an interest rate of 10 per cent compounded annually, find out whether the erection of the well is financially feasible, based on future-worth method.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The cost of erecting an oil well is Rs. 1, 50, 00, 000. The annual equivalent Income of oil well is Rs. 30, 00,000. The salvage value after its useful life of 10 years is Rs. 2,00,000. Assuming an interest rate of 10 per cent compounded annually, find out whether the erection of the well is financially feasible, based on future-worth method.
Transcribed Image Text:The cost of erecting an oil well is Rs. 1, 50, 00, 000. The annual equivalent Income of oil well is Rs. 30, 00,000. The salvage value after its useful life of 10 years is Rs. 2,00,000. Assuming an interest rate of 10 per cent compounded annually, find out whether the erection of the well is financially feasible, based on future-worth method.
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