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Find what is the present value of the mine

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Question 1: A firm wants to open a new coal mine. The price of coal is very volatile and the projected profits over the next five years are : Rs. 100,000 , Rs. 250,000 , Rs. 10,000 , Rs. 200,000 and Rs. 50,000 respectively. After that profits will be a constant Rs. 150,000 per year for next 20 years at which time the mine closes. If 7% is the appropriate discount rate for the first five years and is 8% after that, what is the present value of the mine?

Reference no: EM132497232

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