Question
1 You own a gas pipeline that requires no maintenance and will produce $2 million of revenue next year. Unfortunately, after the first year the
1 You own a gas pipeline that requires no maintenance and will produce $2 million of revenue next year. Unfortunately, after the first year the volume of gas (and thus the revenue) is expected to decline by 4.0% per year.
a. If the discount rate is 11.0% and the pipeline lasts forever, what is it worth today?
b. If the pipeline is to be abandoned at the end of 20 years, what is it worth today?
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Investing In Financial Research A Decision Making System For Better Results
Authors: Cheryl Strauss Einhorn, Tony Blair
1st Edition
1501732757, 9781501732751
