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You own an oil pipeline which will generate a $3.7 million cash return over the coming year. The pipeline's operating costs are negligible, and it is anticipated to last for very long time. Unfortunately, the volume of oil shipped is declining, and cash flows are anticipated to decline by 5% per year. The discount rate is 8%.

Find out the PV of the pipeline's cash flows if its cash flows are assumed to last forever?

Determine the PV of the cash flows if the pipeline is scrapped after 17 years?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91145583

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