A consultancy calculates that it can supply crude oil assaying services to a small oil producer...

 

Transcribed Image Text:

A consultancy calculates that it can supply crude oil assaying services to a small oil producer for $120,000 per year for five years. There are some upfront costs the consultancy will require the oil producer to absorb. What is the maximum that these upfront costs could be, if the equivalent annual annuity to the oil company is to be under $150,000, given that the cost of capital is 12%? OA. $30,000 B. $108,143 OC. $150,000 O D. $124,365 A consultancy calculates that it can supply crude oil assaying services to a small oil producer for $120,000 per year for five years. There are some upfront costs the consultancy will require the oil producer to absorb. What is the maximum that these upfront costs could be, if the equivalent annual annuity to the oil company is to be under $150,000, given that the cost of capital is 12%? OA. $30,000 B. $108,143 OC. $150,000 O D. $124,365

Answer rating: 100% (QA)

The answer is C 150000 r 12 Annuity Facto... View the full answer