You own a gold mine that will produce a net cash inflow of $2.4 million at the end of this year. Cash flow will grow at an annual rate of 3.5% and the discount rate is 6.5% per year.
(a) What is the PV of all future cash flows if it is assumed that the gold mine is never closed?
(b) What is the PV of all future cash flows if it is assumed that the gold mine will be closed after 20 years?
(c) What is the PV of all future cash flows if it is assumed that the gold mine will be closed after 20 years and that the annual cash flow is realized in two equal semi-annual installments? ($1.2 million each for the first year)