Subsequent production-anticipated revenue stream

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Suppose that an oil is expected to produce 100,00 barrels of oil during its first production year. However, its subsequent production (yield) is expected to increase by 12% over the previous year's production. The oil well has a proven reserve of 1,000,000 barrels.

Suppose that the price of oil is expected to be $30.00 per barrel during the next four years. What would be the future worth at the end of four years, of the anticipated revenue stream over the next four years? Assume an interest of 10% compounded annually.

Reference no: EM13809220

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