What the price of the oil turns out to be

Assignment Help Finance Basics
Reference no: EM131890633

You are considering buying an oil field. If you buy the field you can extract the oil in one year. There are 100 barrels of oil that can be extracted from this field; the cost of doing so is $4,000. You expect the price of oil in one year to be $50/barrel. If your discount rate is 15%, how much are you willing to pay for the field? Assume you are going to drill in one year no matter what the price of the oil turns out to be. Ignore real options.

Reference no: EM131890633

Questions Cloud

Determining the risk premium : What are the various risk elements that are considered when determining the risk premium.
What is b debt ratio : Company B has the same sales, assets, and net income, but its ROE is 30 percent. What is B's debt ratio? (Hint: Begin by looking at the Du Pont equation.)
Why were arabs able to conquer a vast empire so quickly : How did Ethiopia benefit from its position in the horn of Africa? Why were Arabs able to conquer a vast empire so quickly?
What is your assessment reidmans thesis in his article : What is your understanding or assessment of the problems caused by lack of a single, consensus definition of homeland security.
What the price of the oil turns out to be : Assume you are going to drill in one year no matter what the price of the oil turns out to be. Ignore real options.
Describe the plot and flow of the show : Describe the plot and flow of the show (so I know you watched it) and then critique the show; did you like it? Did you enjoy the actors? etc.
Four criteria for successful market segmentation : Evaluate the kids' segment against the four criteria for successful market segmentation
What is the asymmetry john reed discovers at citibank : What is the "asymmetry" (weakness) John Reed "discovers" at Citibank? What makes it rare and inimitable?
What is the maximum days in receivables : If the firm wishes to get its factoring costs below 11%, what is the maximum days in receivables it can have?

Reviews

Write a Review

Finance Basics Questions & Answers

  How does cam relate to system engineering

Draw a flowchart showing the interface relationships among CAD, CAD, and CAS (or equivalent).

  Prepare a written or oral report on your findings

Determine for convenience, Brad has his driver's license number printed on his checks.- Prepare a written or oral report on your findings and recommendations for Brad.

  What is the total amount of interest paid

A house is purchased for $350,450. A down payment of 15% is made and the remainder is financed with a 30-year fixed loan with a nominal interest rate of 8% to be paid off in monthly installments at the end of each month.

  Triumph company has total assets worth 6413228 next year

triumph company has total assets worth 6413228. next year it expects a net income of 3145778 and will pay out 70

  What happened in the skilling case

What happened in the Skilling case and how did the Supreme Court resolve the issue before it?

  Construct an arbitrage trade to take advantage

Consider the following trade. German government bond (bund) futures trade on the LIFFE (London) and DTB (Frankfort) exchanges. The futures contracts.

  Dual distribution method

Identify a product offered through a manufacturer using a dual distribution method. Are there differences between the customers targeted by each channel? How do the purchase experiences differ?

  Which is recoverable at the end of the project

The project will require $3,000 of net working capital, which is recoverable at the end of the project. What is the net present value of this project at a discount rate of 12 percent and a tax rate of 34 percent?

  Chains? in-house instead of purchasing

If the company pays tax at a rate of 35% and the opportunity cost of capital is 15%?, what is the net present value of the decision to produce the chains.

  Unbiased estimator of the error variance

This assignment will guide you through the derivations needed to determine what is a unbiased estimator of the error variance in the context of a univariate linear regression. This assignment may be quite challenging.

  Determine if the option will he exercised early

Suppose the stock discussed above pays dividends. Assume all parameters are the same. Consider these three forms of dividends paid by the firm.(a) The stock pays a continuous, known stream of dividends at a rate of 4% per time.

  What is the value of limited brands stock

What is the value of Limited Brands stock when the required return is 12.5 percent? (Round your answer to 2 decimal places.)

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd