A task force of capital budgeting analysts at seger ltd

Assignment Help Accounting Basics

Reference no: EM13582680

A task force of capital budgeting analysts at Seger Ltd. collected the following data concerning the drilling and production of known petroleum reserves at an offshore location:


Investment in rigging equipment and related personnel costs required to pump the oil	$	6,200,000
Net increase in inventory and receivables associated with the drilling and production ofthe reserves. Assume this investment will be recovered at the end of the project.		1,152,000
Net cash inflow from operations for the expected life of the reserves, by year:
2010		1,920,000
2011		3,456,000
2012		1,632,000
Salvage value of machinery and equipment at the end of the well's productive life		960,000
Cost of capital		10	%

Required:

(a)

Using calculate the net present value of the proposed investment in the drilling and production operation. Assume that the investment will be made at the beginning of 2010, and the net cash inflows from operations will be received in a lump sum at the end of each year. (Ignore income taxes.) (Round pv factor to 4 decimal places, intermediate calculations and the final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Reference no: EM13582680

Questions Cloud

Tabletop ranches inc is considering the purchase of a new : tabletop ranches inc. is considering the purchase of a new helicopter for 400000. the firms old helicopter has a book

The total evaporation amount of a growing season in : the total evaporation amount of a growing season in minneapolis is approximately normally distributed with a standard

Average operating assets are 110000 and net operating : average operating assets are 110000 and net operating income is 23100. the company invests 25000 in new assets for a

Department a uses a certain product as a component in : department a uses a certain product as a component in making another product. department b is currently making and

A task force of capital budgeting analysts at seger ltd : a task force of capital budgeting analysts at seger ltd. collected the following data concerning the drilling and

A trending variable cannot be used as the dependent : decide if you agree or disagree with each of the following statements and give a brief explanation of your decisiona

Calculate the following variances showing all computations : julius company developed the following standard costs for its product for 2012standard cost

What is the probability that a random sample of 100 medium : question suppose that the medium coffees sold by a certain coffee shop have a mean volume of 16 ounces and a standard

Sycamore company uses a certain part in its manufacturing : sycamore company uses a certain part in its manufacturing process that it buys from an outside supplier for 29 per part

User Account

All Pages