Calculate the Present Value of Infinite Pipeline

What is the present value of an infinite pipeline with an annual cash flow of $100 and a discount rate of 11.0%?

The present value of an infinite pipeline with an annual cash flow of $100 and a discount rate of 11.0% is approximately $909.09.

When calculating the present value of an infinite pipeline with a constant cash flow and a discount rate of 11.0%, we can use the concept of present value to determine its current worth.

The present value represents the current value of future cash flows, taking into consideration the discount rate. To compute the present value, we need to discount the future cash flows by the discount rate. In this case, since the pipeline generates a constant cash flow indefinitely, we can use the formula:

Present Value = Cash Flow / Discount Rate

Given that the annual cash flow is $100 and the discount rate is 11.0%, the calculation would be as follows:

Present Value = $100 / 0.11 = $909.09

Therefore, the present value of an infinite pipeline with an annual cash flow of $100 and a discount rate of 11.0% is approximately $909.09. This indicates the current worth of the pipeline today considering the future cash flows and the discount rate applied.

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