Question : 98. Santa Cruz Oil obligated to the State of Nevada to : 1412664

98.

Santa Cruz Oil is obligated to the State of Nevada to restore leased land to its original condition after its oil drilling activities are over in four years. The cash flow possibilities are probabilities for the restoration costs in four years are as follows:

 

The company's credit-adjusted risk-free interest rate is 6%.

Required:

Calculate the liability that Santa Cruz must record at the beginning of the project for the restoration costs.

The expected cash flow is

 

99.

Jackpot Mining is obligated to the State of California to restore leased land to its original condition after its mining activities are over in six years. The cash flow possibilities and probabilities for the restoration costs in six years are as follows:

 

The company's credit-adjusted interest rate is 4%.

Required:

Calculate the liability that Jackpot must record at the beginning of the project for the restoration costs.