Petrobras, the Brazilian energy company, has iden­tified two alternatives to provide potable water to offshore platforms—purchase and operate the equipment, or contract long term with Manal and Associates, an international oilfield service corpo­ration. For the estimates shown, use capitalized cost analysis at i = 6% per year to determine (a) the better economic choice for Petrobras, and (b) the maximum annual M&O cost that will cause Manal and Associates to succeed in winning the contract.


(a) Develop the spreadsheet with 2% increases in M&O for purchase and a constant

$10,000 for contract (C5 is the anchor cell). Decision: Purchase the equipment.

(b) Use Goal Seek to change cell C5. Manal would have to decrease its M&O cost to a much smaller $902 per year from the estimated $10,000.

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What will be an ideal response?

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Fill in the blank(s) with the appropriate word(s).

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