1. Suppose you are considering buying a gold deposit. It will cost $1 million per year to construct a mine so that gold can be extracted. The construction period lasts 3 years. In the fourth year, production starts. Each year the mine operates, it will yield a profit (total revenue minus total cost) of $500,000. Costs are paid and profits are received at the beginning of the respective year. What will you pay for the gold deposit if: a. Interest rates are 10% and gold can be extracted for 6 years? b. Interest rates are 5% and gold can be extracted for 10 years? 2. What is the difference between private ownership and open access?
2. What is the difference between private ownership and open access?