Problem 2 (25 points) Suppose that an oil well is expected to produce 100,000 barrels (BBL) of oil during its first year of production. However, its subsequent production (or yield) is expected to decrease by 12% over the previous year's production for each year of production over the 7-year project. The oil well has proven reserves to satisfy the project requirements. The price of oil is expected to start at $120 per barrel during the first year and increase 8.5% over the previous year's price. The outsourced cost of operation is a fixed $500K per year for the life of the project. The well was purchased at the beginning of the first year at a bargain price of $1OM. Determine the PRESENT WORTH based on the cash flows for the 7-year project at an tnterest 12% compounded annually. rate of A. B Assume that the business plan calls for the. safe of the project at the end of the thin (entrepreneur's "exit strategy"). Determine the PW of the project at the anticipated time based on the remaining cash flow stream. (This is the upper limit of value from the perspective.)