Question

You own an oil pipeline that will generate a 2.2 M€ cash return over the coming...

  1. You own an oil pipeline that will generate a 2.2 M€ cash return over the coming years. The pipeline’s operating costs are negligible, and it is expected to last forever. The discount rate is 8%. What is the PV of the pipeline’s cash flows?

Please show the workout and all the steps you follow to reach the final results

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans 27.5 M€

The PV of the pipeline’s cash flows = Annual cash flow / Discount rate

                                                    = 2.2 / 8%

                                                     = 27.5 M€

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You own an oil pipeline that will generate a $2.2 million cash return over the coming...
You own an oil pipeline that will generate a $2.2 million cash return over the coming year. The pipeline’s operating costs are negligible, and it is expected to last for a very long time. Unfortunately, the volume of oil shipped is declining, and cash flows are expected to decline by 2.5% per year. The discount rate is 6%. a. What is the PV of the pipeline’s cash flows if its cash flows are assumed to last forever? (Do not round...
You can purchase an oil pipeline for $3 million today. It is forecasted to generate $2...
You can purchase an oil pipeline for $3 million today. It is forecasted to generate $2 million a year, with the first payment one year from today. The pipeline’s operating costs are negligible, and it is expected to last for a very long time. Unfortunately, the volume of oil shipped through this pipeline is expected to decline, and the cash flows are expected to decline by 4% per year. Further, to comply with environmental regulations, it will need a $1.2...
Your company has the opportunity to enter a business that will generate cash-flows of 12,000€ per...
Your company has the opportunity to enter a business that will generate cash-flows of 12,000€ per year, starting next year, and during 10 years. Calculate how much your company should invest today in order to obtain a yearly profitability of 5%. c) Your company has the opportunity to enter a business that will generate cash-flows of 12,000€ per year, starting in 5 years, and during 10 years. Calculate the future value of such delayed annuity under yearly profitability of 5%.....
You expect to receive $5,000 next year, cash flows of $4,000 annually over the following 6...
You expect to receive $5,000 next year, cash flows of $4,000 annually over the following 6 years, and one last cash flow of $8,000 the following year. If the appropriate discount rate is 7%, what is this stream of cash flows worth to you today? Round to the nearest cent. ​[Hint: Timeline is very important here. As with all advanced TVM questions, first convert the annuity into its single cash-flow equivalent, in this case using the PV annuity formula. In...
RTE Telecom Inc. is expected to generate a free cash flow of $167 million this year...
RTE Telecom Inc. is expected to generate a free cash flow of $167 million this year (FCF1 = $167 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever. RTE Telecom Inc.'s weighted average cost of capital (WACC) is 12.78%. Use corporate valuation method to complete...
Q1: Carrefour is expecting its new center to generate the following cash flows: Years 0 1...
Q1: Carrefour is expecting its new center to generate the following cash flows: Years 0 1 2 3 4 5 Initial Investment ($35,000,000) Net operating cash-flow $6,000,000 $8,000,000 $16,000,000 $20,000,000 $30,000,000 a. Determine the payback for this new center. (1 mark) b. Determine the net present value using a cost of capital of 15 percent. Should the project be accepted? (1 mark) Q2. What is the EAC of two projects: project A, which costs $150 and is expected to last...
Fin 101 Assignment Questions Q1: Carrefour is expecting its new center to generate the following cash...
Fin 101 Assignment Questions Q1: Carrefour is expecting its new center to generate the following cash flows: Years 0 1 2 3 4 5 Initial Investment ($35,000,000) Net operating cash-flow $6,000,000 $8,000,000 $16,000,000 $20,000,000 $30,000,000 a. Determine the payback for this new center. (1 mark) b. Determine the net present value using a cost of capital of 15 percent.Should the project be accepted? (1 mark) Answer: Q2.What is the EAC of two projects: project A, which costs $150 and is...
You are considering a project that will require an initial outlay of $54,200. This project has...
You are considering a project that will require an initial outlay of $54,200. This project has an expected life of 5 years and will generate after-tax flows to the company as a whole of $20,608 at the end of each year over its 5-year life. In addition to the $20, 608 cash flow from operations during the fifth and final year, there will be an additional cash outflow of $23,608 at the end of the fifth and final year associated...
Carrefour is expecting its new center to generate the following cash flows: Years 0 1 2...
Carrefour is expecting its new center to generate the following cash flows: Years 0 1 2 3 4 5 Initial Investment ($35,000,000) Net operating cash-flow $6,000,000 $8,000,000 $16,000,000 $20,000,000 $30,000,000 a. Determine the payback for this new center. (1 mark) b. Determine the net present value using a cost of capital of 15 percent. Should the project be accepted? (1 mark) Answer: Q2. What is the EAC of two projects: project A, which costs $150 and is expected to last...
You own a 10-acre vineyard and earn income by selling your grapes to wineries. Your vineyard...
You own a 10-acre vineyard and earn income by selling your grapes to wineries. Your vineyard is currently planted to Merlot grapes, but you are thinking of replanting with Syrah grapes because they are commanding a higher market price per ton. Merlot fetches $1800 per ton but Syrah sells for $2600 per ton, those prices are expected to remain stable, and you produce 50 tons per year. Either way, you plan to sell the vineyard 5 years from today (at...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT