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29 August, 03:51

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 water in the first year, what is the total depletion in year 1? a. $ 400 b. $1,000 c. $1,250 d. $5,000

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  1. 29 August, 04:14
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    b. $1,000

    Explanation:

    In this question we have to apply the unitary method which is shown below:

    Given that

    Payment = $20,000

    Number of gallons of water = 5,000,000

    Extracts = 250,000 gallons

    So, the total depletion would be

    = (Payment * extracted gallons) : (Number of gallons of water)

    = ($20,000 * 250,000 gallons) : (5,000,000 gallons)

    = $1,000
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