Your answer is incorrect.Pharoah Energy Company owns several gas stations. Management is looking to open a new station in the western suburbs ofBaltimore. One possibility that managers at the company are evaluating is to take over a station located at a site that has been leasedfrom the county. The lease, originally for 99 years, currently has 73 years before expiration. The gas station generated a net cash flowof $85,430 in the most recent year, and the current owners expect an annual growth rate of 6.3 percent. If Pharoah Energy uses adiscount rate of 12.30 percent to evaluate such businesses, what is the present value of this growing annuity? (Round factor values to 6decimal places, e.g. 1.521253 and final answer to 2 decimal places, e.g. 15.21.)Present value $727787.774

STEP 1 The amount that a person would be willing to pay to receive a stream of payments for a…

Answered: Pharoah Energy Company owns several gas…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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