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    NPV & Real Options

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    The cash flows are $8.5 million at the end of year 1, end of year 2, etc., "forever".

    An ordinary perpetuity assumes payment at the end of the year, so the $85 million does not need further discounting -- we're evaluating everything as of "today".

    © BrainMass Inc. brainmass.com October 10, 2019, 2:38 am ad1c9bdddf
    https://brainmass.com/economics/cost-benefit-analysis/npv-real-options-386511

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    NPV & Real Options are demonstrated in this solution.

    $2.19