Solution-Drilling a new self sustaining oil well at a cost

Drilling a new self sustaining oil well at a cost

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Reference no: EM132381119

TT oil is considering drilling a new self sustaining oil well at a cost of $3,000,000. This well will produce $300,000 worth of oil during the first year, but as oil is removed from the well the amount of oil produced will decline by 2%, per year forever. If the TT oil's appropriate interest rate is 8%, then the NPV of this oil well is closest to:

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Reference no: EM132381119

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Drilling a new self sustaining oil well at a cost : TT oil is considering drilling a new self sustaining oil well at a cost of $3,000,000. This well will produce $300,000 worth of oil during the first year

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Drilling a new self sustaining oil well at a cost

Reference no: EM132381119

Reference no: EM132381119

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