Reference no: EM131937231
Investment Timing Option: Decision-Tree Analysis The Karns Oil Company is deciding whether to drill for oil on a tract of land that the company owns. The company estimates the project would cost $7 million today.
Karns estimates that, once drilled, the oil will generate positive net cash flows of $3.15 million a year at the end of each of the next 4 years.
Although the company is fairly confident about its cash flow forecast, in 2 years it will have more information about the local geology and about the price of oil. Karns estimates that if it waits 2 years then the project would cost $8.5 million.
Moreover, if it waits 2 years, then there is a 90% chance that the net cash flows would be $3.71 million a year for 4 years and a 10% chance that they would be $1.82 million a year for 4 years. Assume all cash flows are discounted at 12%. If the company chooses to drill today, what is the project's net present value?
A negative value should be entered with a negative sign. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
|
Decays by positron emission
: Phosphorus-30, which has a half-life of 150 seconds, decays by positron emission.
|
|
Atom of the representative elements
: Why does the size of the atom of the representative elements decrease from left to right across a period?
|
|
Determine the project annul net cash flow
: Annual depreciation from the project is $30,000 and the firms tax rate is 40 percent Determine the project annul net cash flow .
|
|
What is the total molar binding energy
: Molar masses (g/mol) are: Co 58.933, p 1.007276, n 1.008665, e 0.0005486. The speed of light is 2.998E+8 m/s.
|
|
What is the projects net present value
: Karns estimates that, once drilled, the oil will generate positive net cash flows of $3.15 million a year at the end of each of the next 4 years.
|
|
Create a shoe website similar to given image
: Create a shoe website similar to attached image. Your website has to include a login in and sign up.Name of the shoe website should be MAGIC KICKS.
|
|
Express the change in internal energy in kilojoules per
: Express the change in internal energy in kilojoules per mole to three significant figures.
|
|
What is that worth today
: An investment promises cash flows in years 1, 2, and 3 of $20,000. In years 4 and 5, it will pay $45,000.
|
|
Calculate the enthalpy change
: Calculate the enthalpy change, ?H, for this reaction per mole of X.
|