Just need part b answered. Please help me I really need help. The prospective exploration for oil in the outer continental shelf by a small, independent drilling company has produced a rather curious pattern of cash flows.The $1,507,000 expense at EOY 10 will be incurred by the company in dismantling the drilling rig.a. Over the 10-year period, plot PW versus the interest rate () in an attempt to discover whether multiple rates of return exist.b. Based on the projected net cash flows and results in Part (a), what would you recommend regarding the pursuit of this project? Customarily, the companyexpects to earn at least 25% per year on invested capital before taxes. Use the ERR method (e=25%).Click the icon to view the interest and annuity table for discrete compounding when the MARR is 25% per year.End of Year00-1010Net CashFlow-$533,000+ 196,000- 1,507,000 N123 4525678910111213141516171819202122232425Single PaymentCompoundAmountPresentFactor Worth FactorTo Find FGiven PFIP1.25001.56251.95312.44143.05183.81474.76845.96057.45069.313211.641514.551918.189922.737428.421735.527144.4089Discrete Compounding; /= 25%55.511269.388986.7362108.4202135.5253169.4066211.7582264.6978To Find PGiven FPIF0.80000.64000.51200.40960.32770.26210.20970.16780.13420.10740.08590.06870.05500.04400.03520.02810.02250.01800.01440.01150.00920.00740.00590.00470.0038CompoundAmountFactorTo Find FGiven AFIA1.00002.25003.81255.76568.207011.258815.073519.841925.802333.252942.566154.207768.759686.9495109.6868138.1085173.6357218.0446273.5558342.9447429.6809538.1011673.6264843.03291054.7912Uniform SeriesPresentWorth FactorTo Find PGiven APIA0.80001.44001.95202.36162.68932.95143.16113.32893.46313.57053.65643.72513.78013.82413.85933.88743.90993.92793.94243.95393.96313.97053.97643.98113.9849SinkingFundFactorTo Find AGiven FAIF1.00000.44440.26230.17340.12180.08880.06630.05040.03880.03010.02350.01840.01450.01150.00910.00720.00580.00460.00370.00290.00230.00190.00150.00120.0009CapitalRecoveryFactorTo Find AGiven PAIP1.25000.69440.51230.42340.37180.33880.31630.30040.28880.28010.27350.26840.26450.26150.25910.25720.25580.25460.25370.25290.25230.25190.25150.25120.2509

The present worth of a project or investment refers to its value at the time of investment in…

The prospective exploration for oil in the outer continental shelf by a small, independent drilling company has produced a rather curious pattern of cash flows. The $1,507,000 expense at EOY 10 will be incurred by the company in dismantling the drilling rig a. Over the 10-year period, plot PW versus the interest rate () in an attempt to discover whether multiple rates of return exist. b. Based on the projected net cash flows and results in Part (a), what would you recommend regarding the pursuit of this project? Customarily, the company expects to earn at least 25% per year on invested capital before taxes. Use the ERR method (e=25%). End of Year 0 0-10 10 Net Cash Flow -$533,000 +196,000 -1,507,000 D

The prospective exploration for oil in the outer continental shelf by a small, independent drilling company has produced a rather curious pattern of cash flows. The $1,507,000 expense at EOY 10 will be incurred by the company in dismantling the drilling rig a. Over the 10-year period, plot PW versus the interest rate () in an attempt to discover whether multiple rates of return exist. b. Based on the projected net cash flows and results in Part (a), what would you recommend regarding the pursuit of this project? Customarily, the company expects to earn at least 25% per year on invested capital before taxes. Use the ERR method (e=25%). End of Year 0 0-10 10 Net Cash Flow -$533,000 +196,000 -1,507,000 D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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