7-25 different methods of investment appraisal: One of the studies on oil exploration, which was submitted to the North Oil Company, showed the availability of large quantities of crude oil in one of...

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Extracted text: 7-25 different methods of investment appraisal: One of the studies on oil exploration, which was submitted to the North Oil Company, showed the availability of large quantities of crude oil in one of the neighboring areas of Tamim Governorate. After studying the subject, it became clear that starting to extract oil from wells requires specialized equipment. Where the cost of the required excavator was estimated at (40) million $ Dollars, to be paid in cash upon starting work. The annual production volume of the oil well has been estimated at (1) million barrels, with its production process expected to continue for a period of (5) years to come. You have the following additional data: The selling price of one barrel 25 $ Dollars The variable cost per barrel 5 $ Dollars The total annual fixed costs of cash 2 million $ Dollars The estimated useful life of the driller (5) years and the expected value of its Salvage at the end of its useful life is zero. The company uses the straight-line method to calculate depreciation. Required: Investment evaluation according to the following methods: 2. The rate of accounting return on investment. 3. The accounting rate of return on the average investment.