An Existing Well Is Operating and the Price of Oil

question 9

Multiple Choice

An existing well is operating and the price of oil is $45 per barrel. The effective lease rate and risk free rate are 3.0% and 4.0%, respectively. The constant cost of extraction is $25 per barrel and the volatility of prices is 15.0%. If it costs nothing to shut down the well, at what price would we close the well?

• A) $12
• B) $25
• C) $37
• D) $49

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Definitions:

Ostomy

A surgical procedure to create an opening (stoma) in the body for the discharge of body wastes.

Sexual Activity

Engaging in any act that stimulates sexual desire, sexual pleasure, or sexual arousal between individuals.

Physical Attraction

The attraction between individuals based on physical appearance and bodily characteristics.

Three-Way Sex

Sexual activity involving three participants simultaneously.