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A proposal calls for an investment of $150,000 in a drilling of a new well. It is expected that the production will generate a revenue
A proposal calls for an investment of $150,000 in a drilling of a new well. It is expected that the production will generate a revenue of $35,000 per year for ten years. At the end of ten years, the production equipment can be sold for $15,000. a) If the MROR is 12% per year, by using annual worth and future worth analysis, determine whether the investment is feasible? (8 Marks) b) Explain your answer (2 Marks) A proposal calls for an investment of $150,000 in a drilling of a new well. It is expected that the production will generate a revenue of $35,000 per year for ten years. At the end of ten years, the production equipment can be sold for $15,000. a) If the MROR is 12% per year, by using annual worth and future worth analysis, determine whether the investment is feasible? (8 Marks) b) Explain your answer (2 Marks)
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