Question
An oil well now produces 100,000 barrels per year. The well will produce for 18 years more, but production will decline by 4 percent per
An oil well now produces 100,000 barrels per year. The well will produce for 18 years more, but production will decline by 4 percent per year. Oil prices, however, will increase by 2 percent per year. The discount rate is 8 percent. What is the PV of the wells production if todays price is $14 per barrel?
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Investments
Authors: Zvi Bodie, Alan J. Marcus, Alex Kane
6th Edition
0072861789, 9780072861785
