What are the minimum and maximum time values of money

Reference no: EM132199808

Question - Your Company has had a good year and has extra money for projects. Your boss wants to propose an infill drilling project for a field that you are responsible for and wants you to perform calculations that will support a request to management for the $1 million required to drill the additional wells. The reservoir is rate insensitive which means that you do not need to be concerned with causing a decrease in reserves as a result of accelerated withdrawal. It is also extraordinarily homogeneous which means that you should not expect an increase in reserves as a result of the infill drilling. You have been given the following expected cash flows (assume they are received at the end of each year).

Year	Without Infill Drilling NCF ($ Millions)	With Infill Drilling NCF ($ Millions)
0	0	-1
1	5	10
2	4	4
3	3	1
4	2	0
5	1	0

a. Prepare a net present value profile of the difference between the two alternatives.

b. What are the minimum and maximum time values of money that favor the drilling?

c. If money is worth 15% to your company, should your boss make her request?

d. Suppose that problems are encountered which cause drilling costs to double. What are the minimum and maximum time values of money that favor the drilling?

Reference no: EM132199808

Questions Cloud

Develop a behavioral intervention plan : Recently, Paulina and the bus driver exchanged words about Paulina's seat on the bus. Paulina proceeded to call the bus driver several inappropriate names.

Find out what is optimal distribution of investment funds : Can we set up a linear optimization problem to find out what is the optimal distribution of investment funds between these two investments

What is the aggregate sales forecast for products : What is the aggregate sales forecast for products A & B?

Summarizing and examining different points of view : Summarizing and examining different points of view. Summarize the articles you picked. Write one paragraph. Identify the sources by title and author

What are the minimum and maximum time values of money : Your Company has had a good year and has extra money for projects. What are the minimum and maximum time values of money that favor the drilling

Do you consider yourself a lifelong learner : How might you use the cognitive taxonomy to ensure that the identified instructional needs will be addressed during the instruction?

How can you rewrite the paragraph : Boring and vague introduction? Yes, I'd say so. How can you rewrite the paragraph above to make it more effective and appealing?

Describe any fallacies you located in the advertisement : Describe any fallacies you located in the advertisement. Describe how your claims logically support your thesis statement as well-supported premises.

Organizational performance using your expertise : You are a Human Resources Consultant. A large corporate company has asked you to help them improve their organizational performance using your expertise.

User Account

All Pages