Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. answer question please let us suppose that abc p

Answer question please Let us suppose that ABC paid $500,000,000 for the right...

90.2K

Verified Solution

Question

Accounting

image

Answer question please

Let us suppose that ABC paid $500,000,000 for the right to explore in the successful tender and that substantial economically recoverable reserves have been found, should the ABC start drilling or should ABC forego the opportunity? Consider the following data: 2,000,000 barrels per day for a project life of five years (5 years of production) with no depletion in the five years of production Average long-term price of crude petroleum is estimated to be $55/barrel but the operational cost to extract per barrel are $45/barrel on a cash basis including payments to the host government in taxes and royalties The weighted cost of capital for ABC is 7%. Opportunity cost is estimated at 3% and technical risk is estimated at 10% In addition to the $500,000,000 mentioned above, ABC corporation will have to set up an oil derrick that costs $1,500,000,000. To get the derrick operational will require one year (during which time production is zero)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

Consider the following. optimize f(r, p) = 3r2 + rp − p2 + p subject to g(r, p) = 3r + 4p...

Finance
1.2K views

Review any current events/transactions that have taken place and have an opinion about them. Describe 3 Business...

Biology
1.2K views

Drag each label to the correct location on the diagram of a tetrad Labels i...

Basic Math
1.2K views

AX H

Basic Math
1.2K views

George was absent for the last accounting test, For those who took the test, the...

Calculus
1.2K views

Listen Use the definition of the derivative to determine f x for f x x5...

Algebra
1.2K views

1 Find the inverse of the relation 1 0 2 1 3 0 4 2

Accounting
1.2K views

Complete the following chart by placing a checkmark in the appropriate column showing the general...

Accounting
1.2K views

Lease or SellAstro Company owns equipment with a cost of $365,200 and accumulated...

Accounting
1.2K views

BUSINESS LAW a. Give actual notce to those who have dealt...

Accounting
1.2K views

Route the following flood hydrograph through river reach for which k= 12.0h and x=0.20. At...

Finance
1.2K views

Need assistance! company is analyzing two mutually exclusive projects, S and L,...