Suppose a firm's profits increase 111 percent after sales change from $3.45 million to $4.7 million. What is the firm's degree of operating leverage (DOL)? Round There is a 30% chance that the amount of oil in a prospective field is 5 million barrels and a 70% chance of 14 million barrels. If the actual amount of oil is 5 million barrels, the present value of the cash flows from drilling will be $1 million. If the amount is 14 million barrels, the present value will be $7.5 million. The cost to drill the well is $5.5 million. Suppose, a test that costs $375,000 can verify the amount of oil under the ground, is it worth paying for the test? Please enter the full number as your answer. (i.e., 10,000,000 and NOT 10 million) What is the net present value of not testing? What is the net present value of testing? Should the company perform the test to verify the amount of oil under the ground? No Test Test
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $20,000 and will be
Suppose a firm's profits increase 111 percent after sales change from $3.45 million to $4.7 million. What is the firm's degree of operating leverage (DOL)? Round
There is a 30% chance that the amount of oil in a prospective field is 5 million barrels and a 70% chance of 14 million barrels. If the actual amount of oil is 5 million barrels, the present value of the cash flows from drilling will be $1 million. If the amount is 14 million barrels, the present value will be $7.5 million. The cost to drill the well is $5.5 million. Suppose, a test that costs $375,000 can verify the amount of oil under the ground, is it worth paying for the test?
Please enter the full number as your answer. (i.e., 10,000,000 and NOT 10 million)
What is the
What is the net present value of testing?
Should the company perform the test to verify the amount of oil under the ground?
| No Test | ||
| Test |
your answer to two decimal places.
What are the operating cash flows in years 1 to 5?
Enter your answer below.
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There is a 30% chance that the amount of oil in a prospective field is 5 million barrels and a 70% chance of 14 million barrels. If the actual amount of oil is 5 million barrels, the present value of the cash flows from drilling will be $1 million. If the amount is 14 million barrels, the present value will be $7.5 million. The cost to drill the well is $5.5 million. Suppose, a test that costs $375,000 can verify the amount of oil under the ground, is it worth paying for the test?
Please enter the full number as your answer. (i.e., 10,000,000 and NOT 10 million)
by Bartleby ExpertWhat are the operating cash flows in years 1 to 5?
by Bartleby Expert
