Asset Management - Assessment 2 - orders 741163 and 741172 should be Coursework

Asset Management - Assessment 2 - orders 741163 and 741172 should be done by the same writer - Coursework Example73). These two are considered viable considerations because they sanction in analyzing the profitability of the given investment.Given the 6 projects that live with been earmarked by the company, the best form of rabbet rate that will be preferable would be the Weighted Average Cost of Capital. This is selected against the backdrop that it helps in identifying the cost of working bully available to the company (Muller, 2002, p 36). This is done by way of calculate the individual rates at which the company is expected to execute payment on average to its securities so as to clear or finance its capital assets. The weighted average cost of capital (WACC) is preferred over others as it holds the potential of ensuring that payment of security holders are not done offhand barely on an average basis to ensure that the net present value can be measured.In its generalized f orm, it is important to establish that the optimization of the CAPEX and OPEX are both directed at the generation of capital fund revenue for the company only that they are to be done in two diametric fashions. For the 100m CAPEX, any spending decisions made on it must be one that can potentially profit the wealth or value of assets that are already in place and that will become useable beyond the given tax year (Cliff, 2009, p. 83). On the part of the 20m OPEX, it would also be expected to be used in a more value for money fashion even though they have to be used to cater for expenses that will be incurred whiles the project is underway (Investopedia, 2012). Given the prevailing background, it is strongly recommended that for the development drilling, both G-3 and G-4 be drilled in 2015. This is because of the collective wealth creation that will diminish from the two wells when drilled concurrently. For example, it is said that the value of G-1 will decline by a dower rate o f 8% per annum. What this means is that if the company would opt for periodic drilling whereby it would