The most important factors that should be given consideration in the valuation of oil land are (1) the amount of oil the property will produce; (2) the amount of money this oil will bring (based upon the future prices of oil); (3) development and production costs; (4) the rate of interest on the investment; (5) the retirement or amortization of invested capital; and (6) the salvage or “scrap” value of the equipment when the property is exhausted.
These essential factors are of varying importance, and some of them may not enter all valuation problems, but most of them should be...
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