Average book rate of return method
Input(s)
\(C\): Initial Investment/Capital ($)
E: Total Net Undiscounted Cash Flow during the whole project ($)
\(n\): Life of the Project (years)
\(N\): Total Recoverable Oil Amount (bbl)
\(N_{k}\): Total Recoverable Oil Amount in \(\mathrm{k}^{\text {th }}\) year (bbl)
\(N_{p}\): Total Recoverable Oil Amount in \(\mathrm{n}^{\text {th }}\) year (bbl)
\(Q_{k}\): Oil Production in \(\mathrm{k}^{\text {th }}\) year (bbl)
\(D\): Present worth Factor (dimensionless)
\(W_{p}\): Working Profit per barrel of Oil \((\$ / b b l)\)
Output(s)
P: Profit \((\$)\)
\(\sum\) B: Total End of Year Balance not Amortized ($)
\(\sum \mathrm{B}_{\mathrm{md}}\): Total Mid-Year Balance not Amortized ($)
\(\mathrm{r}\): Annual Average Rate of Return ($)
\(\mathrm{r}_{\mathrm{md}}\): Average Mid Year Rate of Return ($)
Formula(s)
Reference(s)
Serpen, U., Petroleum Economics, Course Notes, ITU Petroleum and Natural Gas Engineering, Istanbul, Turkey, (2008) Page: 45.