A company starts using an oil rig at a cost as follows: $million Construction 200 Installation 100 The oil starts pumping at the start of the year. At this point, the company signs a license with the government agreeing to dismantle the rig when the oil runs out which is estimated to be 20years. the cost of dismantling the rig is estimated at $120million and the discount rate is 10%. What will be the effect on the Financial Statements in the current year. Show the amount that will be in the financial statement
A company starts using an oil rig at a cost as follows: $million Construction 200 Installation 100 The oil starts pumping at the start of the year. At this point, the company signs a license with the government agreeing to dismantle the rig when the oil runs out which is estimated to be 20years. the cost of dismantling the rig is estimated at $120million and the discount rate is 10%. What will be the effect on the Financial Statements in the current year. Show the amount that will be in the financial statement
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 3P
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A company starts using an oil rig at a cost as follows:
$million
Construction 200
Installation 100
The oil starts pumping at the start of the year. At this point, the company signs a license with the government agreeing to dismantle the rig when the oil runs out which is estimated to be 20years. the cost of dismantling the rig is estimated at $120million and the discount rate is 10%.
What will be the effect on the Financial Statements in the current year. Show the amount that will be in the financial statement
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