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Answer:
b
Explanation:
describe the elements of a strategic marketing plan
Answer:
b. $14.7 million
Explanation:
In order to compute the asset retirement obligation, first we have to compute the expected cash flows which are shown below:
= Cash outflows × probability + Cash outflows × probability
= $10 million × 60% + $30 million × 40%
= $6 million + $12 million
= $18 million
Now the asset retirement obligation would be
= (Expected cash flows) ÷ (1 + interest rate)^ number of years
= ($18 million) ÷ (1 + 0.07)^3 years
= ($18 million) ÷ 1.225043
= $14.7 million
