2. The government is auctioning off oil leases at two sites: 1 and 2. At each site,100,000 acres of land are to be auctioned. Cliff Ewing, Blake Barnes, andAlexis Pickens are bidding for the oil. Government rules state that no biddercan receive more than 40% of the land being auctioned. Cliff has bid $1000per acre for site 1 land and $2000 per acre for site 2 land. Blake has bid $900per acre for site 1 land and $2200 per acre for site 2 land. Alexis has bid$1100 per acre for site 1 land and $1900 per acre for site 2 land.Required: Develop the Linear Programming for the above problemTo maximize the government's revenue with a transportation model.

Working: Let, following are the coefficients - (in cost per acre) Land 1 Land 2 Cliff Ewing…

Answered: The government is auctioning off oil…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

May 2018, John purchased two hectares of land for $250,000 on which he planned to build a block of units but unfortunately he ran into financial difficulty. On 1 July 2020 he subdivided the land into two blocks and on 2 June 2021 he sold one block for $160,000 with settlement taking place on 5 July 2021. The market value of the remaining block was $240,000. The associated costs were as follows: Stamp duty on purchase Legal fees on purchase Subdivision costs Legal fees on sale Commission on sale $7,200 $1,400 $15,000 $1,600 $6,300 Required With reference to relevant legal authority, calculate any capital gain or loss on sale of the block to John in the year ended 30 June 2021?
RR must build a tunnel to maintain his access around the mountain. The tunnel could be fabricated of normal steel for an initial cost of $45,000 and should last for 18 years. Maintenance will cost $1,000 per year. Another option would be to use corrosion resistant steel, which will last for 18 years, with annual maintenance cost of $100. In 18 years there would be no salvage value for either bridge. RR pays combined federal and state taxes at the 48% marginal rate and uses straight-line depreciation. If the after tax MARR is 10%, what is the maximum amount that should be spent on the corrosion-resistant tunnel? Enter your answer as follow: 123456.78
Jack Toronto is the newly recruited financial analyst of Von Mining Company Ltd. He has been asked to analyze a proposal to acquire a drilling machine. He received the appropriation capital request. Von Mining Company can purchase the drilling machine for GH¢ 50,000. Von Mining Company Ltd can also lease the drilling machine for GH¢12,200 a year for a 5-year period from Trosky Leasing Ltd. The expected life of the machine is given as 5 years and expected to have a salvage value of GH¢5000 in 5 years’ time. The mining company intends to buy the drilling machine a fair market value at that time. If the mining company decides to buy the machine, it can acquire financing at 20%. It will cost the Mining Company GH¢6,000 in maintenance and insurance of the drilling machine. The tax rate is 34%. Assume depreciation is on straight line basis and lease rentals are tax deductible. (Assume payment is made at the end of the year) Required: a). Calculate NPV to Von Mining Company Ltd of the lease…
ou have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $120,000. The truck falls into the MACRS 7-year class, and it will be sold after 7 years for $12,000. Use of the truck will require an increase in NWC (spare parts inventory) of $4,200. The truck will have no effect on revenues, but it is expected to save the firm $52,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the operating cash flows for this project be during year 2?
Shamrock Oil owns a parcel of land that has the potential to be an underground oil field. It will cost $550,000 to drill for oil. If oil does exist on the land, Shamrock will realize a payoff of $3,000,000 (not including drilling costs). With current information, Shamrock estimates that there is a 0.3 probability that oil is present on the site. Shamrock also has the option of selling the land as is for $300,000, without further information about the likelihood of oil being present. A third option is to perform geological tests at the site, which would cost $150,000. There is a 30% chance that the test results will be positive, after which Shamrock can sell the land for $550,000 or drill the land, with a 0.70 probability that oil exists. If the test results are negative, Shamrock can sell the land for $60,000 or drill the land, with a 0.05 probability that oil exists. Using a decision tree, recommend a course of action for Shamrock Oil. Choose the correct decision tree that corresponds…
An electric company must decide between two options for managing the blowdown water from its cooling tower. Option 1 is to continue the lease on 50 acres of land for another 5-year period and dispose of the water by spray irrigation. The landowner will move the pipe around as necessary and maintain the spray nozzles and valves. The previous lease cost $125,000 per year with payments due midway through each year. Now the landowner will require beginning of year payments of $180,000 each year. Option 2, which releases the 50 acre tract of land, involves purchasing a treatment system that will allow the recycling of most of the blowdown water. This system will have an initial cost of $1,600,000 and an AOC of $58,000 per year. However, the company will save $220,000 per year because it will not have to purchase as much make-up water as with option 1. At the end of 5 years, the company will be able to sell the equipment back to the local equipment supplier for 30% of the first cost. If the…

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS