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What might be the factor that abc wants

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Question - Recently, ABC Company began a lease for Gas and Oil well Rig. A rig is the actual equipment that drills for oil and gas.  The rig is the actual equipment that handles oil pipeline drilling down into the earth. The oil and gas well rig normally is valued from $2.5 to $7.00 million dollars depending on features.  A normal rig has a 20 to 25 year life span.  ABC has decided on a 7 year lease with early termination option.

Required - What might be the factor that ABC wants an early termination for this piece of equipment?   The termination option costs 10% of the value of the 7 year lease. What do you think?

Reference no: EM133169547

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