Project #68696 - finance (captial budgeting topic)

  You own a producing oil well.  If you do nothing, 5000 barrels of oil will “ooze” out of the ground in two years.  Experts predict the oil can be sold for $100.80/barrel, two years from now.  However, if the same 5000 barrels can be extracted in one year, by purchasing an oil pump today for $25,000.00, experts predict it can be sold for $90.00/barrel.  Assume, after either scenario, nothing will be left and the pump will have no salvage value.

 

Should you buy the pump?  Why or Why Not?  

Subject Business
Due By (Pacific Time) 04/27/2015 11:00 pm
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