An oil and gas producing company owns 40,000 acres of land in asoutheastern state. It operates 650 wells which produce 20,000 barrelsof oil per year and 1.2 million cubic feet of natural gas per year. Therevenue from the oil is $2,000,000 per year and for natural gas theannual revenue is $560,000 per year. What bid should be made topurchase this property if the potential buyer is hoping to make 17% peryear on his investment over a period of 9 years. N1233456789101112131415Single PaymentCompoundAmountPresentFactor Worth FactorTo Find FGiven PF/PDiscrete Compounding; i = 17%1.17001.36891.60161.87392.19242.56523.00123.51154.10844.80685.62406.58017.69879.007510.5387To Find PGiven FP/F0.85470.73050.62440.53370.45610.38980.33320.28480.24340.20800.17780.15200.12990.11100.0949CompoundAmountFactorTo Find FGiven AF/A1.00002.17003.53895.14057.01449.206811.772014.773318.284722.393127.199932.823939.404047.102756.1101Uniform SeriesPresentWorth FactorTo Find PGiven AP/A0.85471.58522.20962.74323.19933.58923.92244.20724.45064.65864.83644.98845.11835.22935.3242SinkingFundFactorTo Find AGiven FA/F1.00000.46080.28260.19450.14260.10860.08490.06770.05470.04470.03680.03050.02540.02120.0178CapitalRecoveryFactorTo Find AGiven PA/P1.17000.63080.45260.36450.31260.27860.25490.23770.22470.21470.20680.20050.19540.19120.1878

Given that, Revenue from oil is $2000000 per year Revenue from natural gas is $560000 per year…

An oil and gas producing company owns 40,000 acres of land in a southeastern state. It operates 650 wells which produce 20,000 barrels of oil per year and 1.2 million cubic feet of natural gas per year. The revenue from the oil is $2,000,000 per year and for natural gas the annual revenue is $560,000 per year. What bid should be made to purchase this property if the potential buyer is hoping to make 17% per year on his investment over a period of 9 years.

An oil and gas producing company owns 40,000 acres of land in a southeastern state. It operates 650 wells which produce 20,000 barrels of oil per year and 1.2 million cubic feet of natural gas per year. The revenue from the oil is $2,000,000 per year and for natural gas the annual revenue is $560,000 per year. What bid should be made to purchase this property if the potential buyer is hoping to make 17% per year on his investment over a period of 9 years.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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