Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Calculate the After-Tax Cash Flow. NPV (at minimum ROR=20%) and ROR for the following investment with 6 years life time fl The Investor is a

image text in transcribed
Calculate the After-Tax Cash Flow. NPV (at minimum ROR=20%) and ROR for the following investment with 6 years life time fl The Investor is a Non -integrated pet -ileum company Total producible oil in the reserve is estimated to bo 2.400.000 hare Production role w4 be 400,000 barrel of oil per year from year 1 to year 6 Monorail right on cost for property would be $1.600.000 at time zero Intangible dining cost (IOC) is expected to be $7.000.000 at 6me zero Tangible equipment cost is $3,000.000 at time zero Working capital of $1.500,000 also at time zero Equipment depreciation will be based on MACRS 5 years life depreciation starting from year 1 to yon' 6 (rates to the table A 1 for 5- 9 years half-year convent on I The product selling price assumed $45 per barrel which has 10% each year applicable from year 2 Operating oust is $1.500.000 armada with escalation rate of 10% starting from year 2 Income tax is 40% Royalty 15% for

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

GAO Financial Audit Manual Volume 3 June 2018

Authors: United States Government GAO

2018 Edition

979-8733166001

More Books

Students also viewed these Accounting questions