Show how they got to 20.94 MM. Assuming an initial bid of -$10,000,000 was accepted, what is the projects NPV @ 20%, ROR, GROR, and Benefit Cost Ratio? Remember to properly interpret your findings!

3-55 What is the maximum amount that we can bid for an offshore lease if we have a 20% investment opportunity rate (and assume we can predict exactly what will happen)? Assume annual compounding. The timing of the investments and the production schedule are contained in the following tables. Do your analysis BFIT. End of 15 years: Salvage Value = abandonment costs The present value of the production, discounted at 20%, at the beginning of year 5 (end of year 4) is $98MM. Ans: BID=$20.94MM