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!!!

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Expert Solution

The answer is $1.234B

jeff jeffy answered 1 year ago

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