Question
As a CEO of a private firm, you are considering a government contract that will generate a constant and risk-free cash flow of $100
As a CEO of a private firm, you are considering a government contract that will generate a constant and risk-free cash flow of $100 million each year for the firm over the next four years. In order to determine the price of the project, you have collected the Treasury bond price information as follows: The prices of Treasury zero coupon bonds with $1000 face value and different maturities are: $980 for 1-year maturity, $920 for 2-year maturity, $850 for 3-year maturity, and $750 for 4-year maturity. Given the information above, what should be the price of the project?
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