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You own a gas pipeline that requires no maintenance, will produce revenue of $10 million next year, and will last forever. Unfortunately, the volume of

You own a gas pipeline that requires no maintenance, will produce revenue of $10 million next year, and will last forever. Unfortunately, the volume of gas (and thus the revenue from the pipeline) is expected to decline by 10% per year. a) If the discounted rate is 15% and the pipeline lasts forever, what is it worth today? b) If the pipeline is abandoned (at a scrap value of $20 million) at the end of 10 years, what is it worth today?

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