Business, 28.02.2020 05:59 donniemoore
You own an oil pipeline that will generate a $2 million cash return over the coming year. The pipeline’s operating costs are negligible, and it is expected to last for a very long time. Unfortunately, the volume of oil shipped is declining, and cash flows are expected to decline by 4% per year. The discount rate is 10%.
(a) What is the PV of the pipeline’s cash flows if its cash flows are assumed to last forever?
(b) What is the PV of the cash flows if the pipeline is scrapped after 20 years?
Answers: 1
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You are head of the schwartz family endowment for the arts. you have decided to fund an arts school in the san francisco bay area in perpetuity. every 5 years, you will give the school $ 1 comma 000 comma 000. the first payment will occur 5 years from today. if the interest rate is 5.9 % per year, what is the present value of your gift?
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Suppose a country's productivity last year was 84. if this country's productivity growth rate of 5 percent is to be maintained, this means that this year's productivity will have to be:
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Business, 23.06.2019 06:00
Which factor determines who a society will produce goods and services for?
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You own an oil pipeline that will generate a $2 million cash return over the coming year. The pipeli...
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