The exploitation management of an oil company received the following data on an oil well: investment in equipment at time zero, 15,853; exploration expenses at the end of the first semester, $20,000; installation expenses for the extraction of crude oil, 20000 dollars, at the end of the first year. Revenue is calculated at $20,000 at the end of each one of years 2 through 7, which would decrease to $15,000 at the end of year 8, to $10,000 dollars at the end of year 9 and $5,000 at the end of year 10, at which point the project would be abandoned. well. If the oil company were to exploit this well commercially, determine the rate of annual return you would earn on the investment.

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The rate of return on the investment would be 10 Our rate of return on investment assuming the oil corporation will use this well for commercial purpo... View the full answer