Question
Using engineering economy Answer fast please i need it now :( An oil company is trying to determine whether to expand operations on a series
Using engineering economy
Answer fast please i need it now :(
An oil company is trying to determine whether to expand operations on a series of oil wells currently being explored and drilled in a certain country. It initially cost the oil company $230,000,000 to acquire the leases on the land where they hoped to drill for oil. The yearly exploration and drilling costs are $35,000,000. The materials and equipment being used in this project would have a salvage value of $40,000,000 at the end of 10 years.. The oil company has developed a second option on how they would expand their exploration and drilling operations. he second option would have an initial cost of $80,000,000 , annual operating and maintenance cost of $15,000,000 and no salvage value.. If the oil company produces 500,000 barrels of oil per year, the interest rate is 10% and the life of the wells is 10 years, determine the price per barrel to justify implementing the second option if the second option would produce an additional 500,000 barrels of oil per year and have a life of 5 years.
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