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An Oil Company Uses a Technology Which It Purchased for $15

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Essay

An oil company uses a technology which it purchased for $15 million. Operating costs are $2 million per year, and output is 1 000 barrels per day. Calculate the after-tax IRR given the following information: The corporate tax rate is 25%, the price of oil is $20 per barrel, the service life of the technology is 5 years and salvage value is $2 million. If the after-tax MARR is 15%, is this a good investment?


Definitions:

Commission Compensation Plan

A remuneration structure where employees or agents are paid based on the sales or deals they close, incentivizing performance.

Net Dollar Volume

The total amount of sales revenue after discounts, returns, and allowances are subtracted.

Behavioral Measures

Quantitative indicators used to assess actions and reactions of consumers, often used in market research.

Compensation Plan

A system outlining how employees are paid and rewarded for their work, including salary, bonuses, and non-monetary benefits.

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