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What is the value of the oil rights

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Reference no: EM131329269

An oil well produces 20,000 barrels of oil per year. Suppose the price of oil is $50 per barrel. You want to purchase the right to the oil produced by this well for the next five years.

At a discount rate of 10 percent, what is the value of the oil rights? (You can assume that the cash flows from selling oil arrive at annual intervals.)

Reference no: EM131329269

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