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Business, 05.05.2020 04:24 haileysolis5

Jerry discovers petroleum bubbling up from the ground near his barn. He pays $8,000 for a petroleum engineer to take a look. The engineer says that, if Jerry puts up a $2 million oil rig, he can expect to pump 40,000 barrels of oil from the ground each year for eight years, and then the well will run dry. Jerry figures he can sell the oil for $35 per barrel at the wellhead (that is, the buyer will pay all transportation). Jerry has a discount rate of 22%. Should he invest in the oil rig

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Jerry discovers petroleum bubbling up from the ground near his barn. He pays $8,000 for a petroleum...
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