Permian Partners (PP) produces from aging oil fields in west Texas. Production is currently 1.91 million barrels per year, but is declining at 8% per year for the foreseeable future. Costs of production, transportation, and administration add up to $26.10 per barrel. The current oil price is $66.10 per barrel. PP has 8.1 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 $26.10. Also, ignore taxes. a. Assume that oil prices are expected to fall to $61.10 per barrel next year, and to $56.10 and $51.10 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?