Improved methods of oil and gas recovery, including fracking, have renewed interest in mineral royalties that many thought were worthless. An investor pays $135,000 to a landowner for the first 3 years of royalties after production begins. The investor has a goal to earn an 18% per year rate of return over those 3 years. At the end years 1 and 2, the royalties paid are $70,000 and $50,000, respectively. What royalty must be earned in the 3rd year to achieve the investor's goal? 2$ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±1.

Improved methods of oil and gas recovery, including fracking, have renewed interest in mineral royalties that many thought were worthless. An investor pays $135,000 to a landowner for the first 3 years of royalties after production begins. The investor has a goal to earn an 18% per year rate of return over those 3 years. At the end years 1 and 2, the royalties paid are $70,000 and $50,000, respectively. What royalty must be earned in the 3rd year to achieve the investor's goal? 2$ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±1.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6PA: Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one...

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