When the appropriate discount rate required rate of return


Big Oil, Inc. operates an oil pipeline which will generate a $1 million revenue one year from today. The pipeline is expected to last forever. The volume of oil shipped is declining, and revenues are expected to decline by 5 percent per year. When the appropriate discount rate (required rate of return) is 10 percent, what is the present value of the pipeline's revenue?

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Financial Management: When the appropriate discount rate required rate of return
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