You own a gas pipeline that requires no maintenance and will produce $2 million of revenue next year. Unfortunately, after the first year the volume of gas (and thus the revenue) is expected to decline by 4.0% per year.
a. If the discount rate is 11.0%, and the pipeline lasts forever, what is it worth today?
b. If the pipeline is to be abandoned at the end of 20 years, what is it worth today?
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You own a gas pipeline that requires no maintenance and will produce $2 million of revenue next year...
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