TransAtlantic Petroleum Corp

question 1

Short Answer

TransAtlantic Petroleum Corp. plans to seek two additional production licenses from the Romanian government. The company estimates the costs to drill, acquire the seismic data, and conduct technical studies for these new fields will be $14.2 billion, 7 years from now.
The company plans to establish a fund in a Romanian bank. The fund earns a rate of
return of 5% per year (a rate relative to the Romanian New Lei- RON). How much will the company have to set aside now in U.S. dollars if it is estimated that U.S. dollars will be devalued at an average of 2.25% per year and the present exchange rate is 2.57 RON per
U.S. dollar?

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Definitions:

Productive Capabilities

This term describes the maximum output or efficiency level that an organization or economy can achieve with the current resources and technology.