What is the amount of cash flow in year three

Reference no: EM131932980

Problem

An oil company expects receipts from a group of stripper wells (wells that produce less than 10 barrels per day) to decline according to an arithmetic gradient of $50,000 per year. The receipts are expected to be $300,000 for the end of year 1, and the company expects the useful life of the wells to be 5 years.

a) List the given parameters.

b) Draw the cash flow diagram.

c) What is the amount of cash flow in year 3?

d) What is the equivalent uniform annual worth in year 1 through 5 of the income from the wells at an interest rate of 12% per year?

Reference no: EM131932980

Questions Cloud

What is the probability that none of you have clicked : You and three of your friends, Mo, Chen and Sam have seen the link. What is the probability that none of you have clicked on the link?

What is schenk after-tax cost of debt : If its marginal tax rate is 25 percent, what is Schenk’s after-tax cost of debt?

What would be the cost per unit of producing android : An alternate method of assigning costs is activity-based costing. The major activity for the production of both Processor01 and Android01 is component assembly.

Determine any gain or loss if the old elevator is replaced : ast year (2013), Richter Condos installed a mechanized elevator for its tenants. Determine any gain or loss if the old elevator is replaced

What is the amount of cash flow in year three : What is the amount of cash flow in year 3? What is the equivalent uniform annual worth in year 1 through 5 of the income from the wells at an interest rate.

What information would be helpful in setting other goals : Amber just graduated from college and has a job with a bank. She will earn $52,000 per year. Because she is single and lives in a state where there is no state.

Prepare a summary of cash collections : Cash is collected from customers in the following manner: Month of sale (2% cash discount) 30%. Prepare a summary of cash collections for the 4th quarter

What is the required annual installment payment : The One Company purchased office furniture and equipment for $8,000 and agreed to pay for the purchase. What is the required annual installment payment?

The company future growth rate in dividends : If this situation is expected to continue indefinitely, what would be a reasonable estimate of g, the company’s future growth rate in dividends?

User Account

All Pages