Question
In: Finance
Average Oil Prices Year Price per Barrel 1949 $2.54 1950 $2.51 1951 $2.53 1952 $2.53 1953...
| Average Oil Prices | |
| Year | Price per Barrel |
| 1949 | $2.54 |
| 1950 | $2.51 |
| 1951 | $2.53 |
| 1952 | $2.53 |
| 1953 | $2.68 |
| 1954 | $2.78 |
| 1955 | $2.77 |
| 1956 | $2.79 |
| 1957 | $3.09 |
| 1958 | $3.01 |
| 1959 | $2.90 |
| 1960 | $2.88 |
| 1961 | $2.89 |
| 1962 | $2.90 |
| 1963 | $2.89 |
| 1964 | $2.88 |
| 1965 | $2.86 |
| 1966 | $2.88 |
| 1967 | $2.92 |
| 1968 | $2.94 |
| 1969 | $3.09 |
| 1970 | $3.18 |
| 1971 | $3.39 |
| 1972 | $3.39 |
| 1973 | $3.89 |
| 1974 | $6.87 |
| 1975 | $7.67 |
| 1976 | $8.19 |
| 1977 | $8.57 |
| 1978 | $9.00 |
| 1979 | $12.64 |
| 1980 | $21.59 |
| 1981 | $31.77 |
| 1982 | $28.52 |
| 1983 | $26.19 |
| 1984 | $25.88 |
| 1985 | $24.09 |
| 1986 | $12.51 |
| 1987 | $15.40 |
| 1988 | $12.58 |
| 1989 | $15.86 |
| 1990 | $20.03 |
| 1991 | $16.54 |
| 1992 | $15.99 |
| 1993 | $14.25 |
| 1994 | $13.19 |
| 1995 | $14.62 |
| 1996 | $18.46 |
| 1997 | $17.23 |
| 1998 | $10.87 |
| 1999 | $15.56 |
| 2000 | $26.72 |
| 2001 | $21.84 |
| 2002 | $22.51 |
| 2003 | $27.54 |
| 2004 | $38.93 |
| 2005 | $46.47 |
| 2006 | $58.30 |
| 2007 | $64.67 |
| 2008 | $91.48 |
| 2009 | $53.48 |
| 2010 | $71.21 |
| 2011 | $87.04 |
| 2012 | $93.02 |
| 2013 | $97.91 |
| 2014 | $93.26 |
| 2015 | $48.69 |
| 2016 | $43.14 |
| 2017 | $50.88 |
a) Using the 1949 oil price and the 1969 oil price, compute the annual growth rate in oil prices during the 20 yr period. b) Compute the growth rate between 1969 & 1989 and between 1989 & 2017. c) given the price in 2017 and your growth rate between 1989 and 2017 compute the future price of oil in 2020 & 2025.
Solutions
Expert Solution
a). Price of oil in year 1949 = $2.54
Price of oil in year 1969 = $3.09
annual growth rate between 1949 and 1969 = (P1969/P1949)^(1/20) - 1 = (3.09/2.54)^(1/20) - 1 = 0.98%
b).
Price of oil in year 1969 = $3.09
Price of oil in year 1989 = $15.86
annual growth rate between 1969 and 1989 = (P1989/P1969)^(1/20) - 1 = (15.86/3.09)^(1/20) - 1 = 8.52%
Price of oil in year 1989 = $15.86
Price of oil in year 2017 = $50.88
annual growth rate between 1989 and 2017 = (P1989/P2017)^(1/18) - 1 = (50.88/15.86)^(1/18) - 1 = 6.69%
c). Using growth rate of 6.69% to compute future prices,
So price in 2020 = P2017*(1.0669^3) = 50.88*1.0669^3 = $61.79
Price in 2021 = P2020*1.0669 = 61.79*1.0669 = $65.92
Price in 2022 = P2021*1.0669 = 65.92*1.0669 = $70.33
Price in 2023 = P2022*1.0669 = 70.33*1.0669 = $75.04
Price in 2024 = P2023*1.0669 = 75.04*1.0669 = $80.06
Price in 2025 = P2024*1.0669 = 80.06*1.0669 = $85.42
jeff jeffy answered 2 years agoRelated Solutions
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