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You invest $10 million into an oil pipeline that will generate a $2 million cash income over the coming year, and it is expected to
You invest $10 million into an oil pipeline that will generate a $2 million cash income over the coming year, and it is expected to grow with an annual growth rate of 2% in the next 20 years. However, the operation cost will be $1 million over the coming year, and is expected to growth at 1% in the next 20 years. Suppose at the end of 20 year, you can sell the oil pipeline with the price of $5 million, what is the NPV of this pipeline project if the discount rate is 10%?
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