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Longhorn Energy is planning a $340 million expansion of two major pipelines in Texas. The Austin- based pipeline company will add 56 miles of 36- inch pipeline and 20,000 horsepower of compression. The expansion will increase the capacity of the Katy pipeline in southeast Texas to more than 1.1 billion cubic feet per day from 700,000 million cubic feet per day. Net revenue per cubic foot is $1.25 and the pipeline is expected to have a resale value of 28 million at the end of year 38. Determine the capital recovery cost of this investment if the minimum attractive rate of return is 14% per year.
Noncontrolling Interest
The share of ownership in a subsidiary that cannot be directly or indirectly linked to the parent company.
Fair Value
The revenue expected from an asset sale or the cost to offload a liability in a transaction with market players on the date it is appraised.
Residual Income
Income that remains after all operating expenses and costs of capital have been deducted.
Consolidated Net Income
The total net income of a parent company and its subsidiaries after eliminating intercompany transactions and distributions to noncontrolling interests.
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