What is the pv of production royalties if discount rate

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A government is offering a 10 year contract for off-shore drilling rights. The highest bonus bid is $5 million dollars. However, another firm offers to $800,000 per year for 10 years in production royalties.

a. What is the PV of the bonus bid if the discount rate is 5%?

b. What is the PV of the production royalties if the discount rate is 5%?

A local landfill currently charges $100 per half ton load of waste to dump. The marginal costs to the landfill of operating the dump are about $60 per half ton load of waste. A nearby incinerator charges $120 per half ton of waste, and it costs about $5 per half ton more to haul it to the incinerator.

Reference no: EM13898571

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What is the pv of production royalties if discount rate : A government is offering a 10 year contract for off-shore drilling rights. The highest bonus bid is $5 million dollars. However, another firm offers to $800,000 per year for 10 years in production royalties. What is the PV of the production royalties..

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