Calculate the equivalent annual value of these revenues

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Reference no: EM13721920

An engineer has generated an oil production forecast for a group of wells. According to this forecast, the wells produce 30,000 barrels in the first year. Starting the second year, production declines by 2,000 barrels per year for 4 years. Starting the sixth year, production declines by 3,000 barrels per year for another 4 years. Calculate the present value of the revenues if the oil price is $15 per barrel for the first 5 years and $16 per barrel thereafter. Also, calculate the equivalent annual value of these revenues. Assume interest rate of 8%.

Reference no: EM13721920

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