Permian Partners $($PP$)$ produces from aging oil fields in west Texas. Production is $1\mathrm{.}81$ million barrels per year in $2018,$ but production is

declining at $8\%$ per year for the foreseeable future. Costs of production, transportation, and administration add up to $$25\mathrm{.}10$ per barrel.

The average oil price was $$65\mathrm{.}10$ per barrel in $2018.$

PP has $7\mathrm{.}1$ million shares outstanding. The cost of capital is $10\%.$ All of PP$\text{'}$s net income is distributed as dividends. For simplicity,

assume that the company will stay in business forever and that costs per barrel are constant at $$25\mathrm{.}10.$ Also, ignore taxes.

a$.$ Assume that oil prices are expected to fall to $$60\mathrm{.}10$ per barrel in $2019,$$$55\mathrm{.}10$ per barrel in $2020,$ and $$50\mathrm{.}10$ per barrel in $2021.$

After $2021,$ assume a long$-$term trend of oil$-$price increases at $6\%$ per year. What is the ending $2018$ value of one PP share? $($Do not

round intermediate calculations. Round your answer to $2$ decimal places.$)$

Share value $2016$

b$-1.$ What is PP$\text{'}$s EPS$/$P ratio? $($Do not round intermediate calculations. Round your answer to $4$ decimal places.$)$

EPS$/$P ratio

b$-2.$ Is it equal to the $10\%$ cost of capital?