Suppose the current price of gold is $1,440 an ounce. Hotshot Consultants advises you that gold...

Suppose the current price of gold is $1,440 an ounce. Hotshot Consultants advises you that gold prices will increase at an average rate of 14% for the next two years. After that the growth rate will fall to a long-run trend of 3% per year. Assume that gold prices have a beta of 0 and that the risk-free rate is 6%.

What is the present value of 1.2 million ounces of gold produced in 10 years? WRITE YOUR ANSWER IN BILLION PLEASE.

The answer is not 1.59billion or .98billion.

Please help!!!

Expert Solution

The answer is $1.234B

jeff jeffy answered 1 year ago

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