About the acceptability or unacceptability of this project

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Reference no: EM131007279

An oil and gas company is considering whether to begin drilling a new oil field. The company will need to pay $5 million as an initial investment in order to extract the oil. The company will operate the field for a total of 5 years, during which its annual profit will be $2,812,500. During the 6^th year, the company will not operate or gain any revenue from the oil field, but it will need to pay $9,375,000 in environmental remediation costs to return the area to an acceptable state. Using Excel, graph the company’s present worth (i.e., net present value) as a function of the interest rate . What conclusions can you draw about the acceptability or unacceptability of this project? (This is purposely left as an open-ended question.)

Reference no: EM131007279

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