Gold volatility is zero-what is the value of the mine

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Assume that the spot price of gold is $300/oz, the effective annual lease rate is 3%, and the effective annual risk-free rate is 5%.

A mine costing $275 will produce 1 ounce of gold on the day the cost is paid. Gold volatility is zero. What is the value of the mine?

Reference no: EM132066612

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