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An oil company was evaluating the economic performance of one of its recompleted wells. The company uses 10% MARR or hurdle rate. The well is
An oil company was evaluating the economic performance of one of its recompleted wells. The company uses 10% MARR or hurdle rate. The well is expected to produce for 10 years post recompletion. Year's 1-3 post recompletion revenue was constant at $500,000 per year. However annual revenues are anticipated decline each year by $50,000 per year, starting in year 4. a) Draw the cash flow diagram b) What is the forecast revenue for the production in year 6? c) What is the future value of the cash flow in year 10? d) What is the forecast equivalent annual worth of revenue stream for the 10 year period
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