Considering drilling new oil well that is initially expect

Assignment Help Financial Management

Reference no: EM131622819

Wyatt Oil is considering drilling a new oil well that is initially expected to produce oil at a rate of 10 million barrels per year. Wyatt has a long-term contract that allows them to sell the oil at a profit of $2.50 per barrel. The initial cost of the drilling rig is $175,000,000. If the rate of oil production from the rig declines by 3% per year and the discount rate is 9% per year, then the NPV of this new oil well is closest to:

A) -$333,333,000

B) $28,128,000

C) $33,333,000

D) $39,340,000

E) None of the above

Reference no: EM131622819

Questions Cloud

How much federal income tax is withheld from her paycheck : Emilee Houston is single and is paid semimonthly. She earns $1,682 each pay period and claims zero withholding allowances.

What is the stock price of hde closest to today : Given that the appropriate effective discount rate is 7.0% p.a., what is the stock price of HDE closest to today?

Find the probability distribution of the number of heads : Find the probability distribution of the number of heads when a fair coin is tossed repeatedly until the first tail appears and determine the constant k

Create plan to address need recognition and search behavior : Create a plan to address need recognition, search behavior, and getting the product into the consumers' consideration set.

Considering drilling new oil well that is initially expect : Wyatt Oil is considering drilling a new oil well that is initially expected to produce oil at a rate of 10 million barrels per year.

What is the suta tax : How much SUTA tax must Anaston, Inc., pay to the state for a parttime employee who earns $5,290? The SUTA tax rate is 5.4% of the wages.

Explain how to create and sustain competitive advantage : What is the value of the value chain? Explain. Explain how to create and sustain competitive advantage.

Currect business topic or event : Write an essay on a currect business topic or event. The essay must include at least 1 book, 2 peer-reviewed journals, and 1 online resource.

How much futa tax must university dry cleaners pay : How much FUTA tax must University Dry Cleaners pay for the employee in Exercise 23? The FUTA tax rate is 0.08% of the first $7,000.

User Account

All Pages