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Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 14E
Related questions
Question
Evaluate the discovery – you need to calculate the total worth, worth to the company, government take, value in terms of entitlement interest and working interest.
Field Size |
1.4 Tcf |
Production/Reserve Ratio |
7% of the original field size starting producing year 3 |
Gas Price |
$3.5/Mcf |
CapEx |
$1/Mcf capitalized in 5 years, straight-line |
Operating Cost |
$0.8/Mcf |
Royalty |
10% |
Government Take |
40% |
Cost recovery limit |
60% of gross revenue |
Discount Rate |
10% |
Income Tax Rate |
33% |
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Evaluate the producing gas reserve – total worth, worth to the company, government take, value in terms of entitlement interest and working interest.
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