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Airida [17]
3 years ago
10

A company pays $20,000 for the rights to a well with 5 million gallons of water. If the company extracts 250,000 gallons of wate

r in the first year, what is the total depletion in year 1
Business
1 answer:
Julli [10]3 years ago
5 0

Answer: $1,000

Explanation:

The cost of the well is $20,000

The capacity of the well is 5 million gallons

The cost of one gallon is therefore:

= Cost of all gallons / Number of gallons

= 20,000 / 5,000,000

= $0.004

If 250,000 gallons were extracted in the first year, the depletion is:

= Number of gallons extracted * Cost per gallon

= 250,000 * 0.004

= $1,000

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