Two brothers, Gerald and Henry, own the Edwards Service Company in St. Johns, Newfoundland. It provides onshore services for spent lubricants from North Atlantic offshore platforms. The company needs immediate cash flow. Because the Edwards have an excellent reputation among major oil producers, they have been offered an 8-year contract that pays $200,000 total with 50% upfront and 50% at the end of the suggested 8-year contract. The estimated annual cost for Edwards to provide the services is $30,000. Assume you are the financial person for Edwards. Is the project justified if the brothers want to make at least 8% per year? Use calculator and spreadsheet functions and charts to perform a thorough ROR analysis.
Two brothers, Gerald and Henry, own the Edwards Service Company in St. Johns, Newfoundland. It provides onshore services for spent lubricants from North Atlantic offshore platforms. The company needs immediate cash flow. Because the Edwards have an excellent reputation among major oil producers, they have been offered an 8-year contract that pays $200,000 total with 50% upfront and 50% at the end of the suggested 8-year contract. The estimated annual cost for Edwards to provide the services is $30,000. Assume you are the financial person for Edwards. Is the project justified if the brothers want to make at least 8% per year? Use calculator and spreadsheet functions and charts to perform a thorough ROR analysis.
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