Find the npv of this new oil well

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Reference no: EM132060777

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 cost of drilling the rig is $175,000,000.

If the rate of oil production from the rig declines by 3% over the year and the discount rate is 9% per year (EAR), then using continuous compounding, the NPV of this new oil well is (round to the nearest dollar)

Reference no: EM132060777

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