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Declining perpetuities and annuities You own an oil pipeline that will generatea$2 million cash return over the coming year. The pipelines operating costs are negligible,

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Declining perpetuities and annuities You own an oil pipeline that will generatea$2 million cash return over the coming year. The pipelines 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%. What is the PV of the pipeline's cash flows if its cash flows are assumed to last forever? What is the PV of the cash flows if the pipeline is scrapped after 20 years? Finance.yahoo.com is a marvelous source of stock price data. You should get used to using it Go to finance.yahoo.com and look up the most recent stock prices and the prices five years ago for Amazon (AMZN), Microsoft (MSFT), Google (GOOG), and Apple (AAPL). What was the compound rate of growth in the price of each stock over the five-year period? If each price continues to grow at the same rate for the next five years, what will be the price at the end of that period? You need to have accumulated savings of $2 million by the time that you retire in 20years. You currently have savings of $200,000. How much do you need to save each year to meet your goal? Find the savings calculator on finance. oo.com to check your

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