# Florida Seaside Oil Exploration Company is deciding whether to drill for oil off the northeast coast of Florida. The company estimates that the project would cost $4.24 million today. The firm estimates that once drilled, the oil will generate positive cash flows of$2.12 million a year at the end of each of the next four years. While the company is fairly confident about its cash flow forecast, it recognizes that if it waits two years, it would have more information about the local geology as w

Florida Seaside Oil Exploration Company is deciding whether to drill for oil off the northeast coast of Florida. The company estimates that the project would cost $4.24 million today. The firm estimates that once drilled, the oil will generate positive cash flows of$2.12 million a year at the end of each of the next four years. While the company is fairly confident about its cash flow forecast, it recognizes that if it waits two years, it would have more information about the local geology as well as the price of oil. Florida Seaside estimates that if it waits two years, the project would cost $4.59 million. Moreover, if it waits two years, there is a 85% chance that the cash flows would be$2.306 million a year for four years, and there is a 15% chance that the cash flows will be $0.705 million a year for four years. Assume that all cash flows are discounted at a 8% WACC. Will the company delay the project and wait until they have more information ## Answers #### Similar Solved Questions 2 answers ### Can Someone Help Me ? Can Someone Help Me ?... 2 answers ### You are in a hospital emergency room observing as part of an internship. A child is brought in with a broken arm and the parent says the child fell off a slide while playing in the park. After x-rays and an examination, you notice that a social worker has been brought in. The social worker is asking questions about the incident, and stating the doctor says the break is not consistent with that type of injury. What is the social worker trying to ascertain? A.possible cultural misunderstandings B. You are in a hospital emergency room observing as part of an internship. A child is brought in with a broken arm and the parent says the child fell off a slide while playing in the park. After x-rays and an examination, you notice that a social worker has been brought in. The social worker is asking... 1 answer ### Please help me out with this question Please help me out with this question... 2 answers ### What is the value of 3(4x+5y) - 2(7x-3y) when x = -2 and y = 3PLEASE HELP AND COULD YOU GUYS PLEASE EXPLAIN ​ What is the value of 3(4x+5y) - 2(7x-3y) when x = -2 and y = 3PLEASE HELP AND COULD YOU GUYS PLEASE EXPLAIN ​... 1 answer ### At the city museum, child admission is$5.20 and adult admission is $9.10 . On Tuesday, 116 tickets were sold for a total sales of$852.80 . How many child tickets were sold that day?

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