"DEPLETION, SINKING FUND METHOD, PURCHASE PRICE AND SCRAP VALUE.DEPLETION is the loss in value of an asset such as an oil well or gold mine fromthe gradual removal of the resource. The purchaser expects to receive interest at a certain rate and the eventual return of the investment. The nominal fund annual interest rate is ANNRATE%. NETRETRN is the annual net return to the investor. SCRPVAL is the scrap or salvage value of the asset at term. NUMYEARS is the term in years. PAYMNINT is the payment interval in months. DPRVAL is thevalue of sinking fund at term. EFFRATE% is the yearly effective rate for fund amortization. *** Answers to problems *** (a) Set ANNRATE%=6, NETRETRN=50,000, NUMYEAR=20, PAYMNINT=12 (annual=12 months),RTNRATE%=8, SCRPVAL=0. The purchase price PURPRICE is $466,485.10. Type any key to exit. ||(a) A small oil well is estimated to yield a net return of $50,000 for the next 20 years. At the end of this time, the property is assumedto be worthless. If the replacement sinking fund earns 6% annually, find the purchase price to yield a return of 8%. Type , to see answers. Type (F2) to return to helpfile. '' (c) Copyright PCSCC Inc., 1993"
