Refer back to E27.9 to address the following.
Instructions
Prepare a memo to Pari Raman, your supervisor. Show your calculations from E27.9 (a) and (b). In one or two paragraphs, discuss important non-financial considerations. Make any assumptions you believe to be necessary. Make a recommendation based on your analysis.
E27.9
Swift Oil is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $130,000 and will increase annual expenses by $70,000 including depreciation. The oil well will cost $490,000 and will have a $10,000 residual value at the end of its 10-year useful life. Calculate the annual rate of return.
