Calculate yearly net cash flow BFIT for this investment

Assignment Help Accounting Basics
Reference no: EM133044639

Problem - The reservoir pressure in the Smiley Field has declined to the point that Well 15-2 will no longer flow naturally. As a result, it has been decided that a down-hole sucker rod pump, a set of rods, and surface unit having a service life of six years will be purchased for $160,000. The pump will cause the well to produce the oil production as shown in the following table.

Year

8/8 Prod

1

2000

2

1500

3

1200

4

1200

5

1000

6

900

Your working interest is 100%. Your net revenue interest is 75%. Operating costs are estimated to be $40,000 the first year and will increase by $2,000 each of the following five years. The pump has no salvage value. Calculate your revenue using a constant oil price of $85.00/Bbl.

Required - Calculate yearly net cash flow BFIT for this investment. Draw the cash flow diagram.

Reference no: EM133044639

Questions Cloud

Adopting program in the workplace : The program seems to be win-win. The Teladoc consultation is free to employees, compared to a $20 office co-payment, and the doctors are available 24 hours per
What is the value of a training needs assessment : What is the value of a training needs assessment in an organization in general?
Applying the concept of predictive hypothesis : Applying the concept of predictive hypothesis, elaborate how the concept of general mental ability predicting work performance can be operationalised in practic
False positive rate and the false negative rate : You are the head of analytics for an online retailer focused on athleisure and sports attire for mature women and men. The executive team of your company mirro
Calculate yearly net cash flow BFIT for this investment : Your working interest is 100%. Your net revenue interest is 75%. Calculate yearly net cash flow BFIT for this investment
Case study-call center : A local call center is seeking to expand its workforce. Because of the nature of its work, the call center decides to hire only persons who speak perfect Englis
Personality trait influences decision making : This essay aims to present the personality test results of the writer as well as discuss how the personality trait influences decision making.
Enduring set of traits and behaviours : The existence of "personality" as an enduring set of traits and behaviours distinguishes each individual from others.
Engagement levels of current employees : What is more important, raising the engagement levels of current employees or hiring employees with high potential?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd