Permian Partners (PP) produces from aging oil fields in west Texas. Production is currently 1.86 million barrels per year, but is declining at 8% per year for the foreseeable future. Costs of production, transportation, and administration add up to $25.60 per barrel. The current oil price is $65.60 per barrel. PP has 7.6 million shares outstanding. The cost of equity is 10%. All of PPs 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 $25.60. Also, ignore taxes. a. Assume that oil prices are expected to fall to $60.60 per barrel next year, and to $55.60 and $50.60 per barrel in the two years following. After that decrease, assume a long-term trend of oil-price increases at 6% per year. What is the value of one PP share? b-1. What is PPs E/P ratio? b-2. Is it equal to the 10% cost of capital?