Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 3

Many oil price forecasts in the early 2000s indicated that the price of oil in the year 2007 would not exceed $50 per barrel. What is the price of oil today? Why are these prices so difficult to predict? Imagine what the consequences would be if you used these optimistic estimates in your economic analysis in your early project undertaking. What would be some practical ways to consider this type of variation in economic analysis?