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Suppose that an oil well is expected to produce 4,000 barrels of oil during the first production year (n = 1). However, its subsequent production
Suppose that an oil well is expected to produce 4,000 barrels of oil during the first production year (n = 1). However, its subsequent production (yield) is expected to decrease by 200 barrels every year, starting in year 2 (production in year 2 = 4,000 - 200 - 3,800 barrels). The oil well has a proven reserve of 1,000,000 barrels of oil. Suppose that the price of oil is expected to be $ 60.00 per barrel, during the next six years. What would be the present worth ( at n = 0) of the anticipated revenue stream over the next six years, at an annual interest rate of 12 %, compounded annually
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