A mine costing $1000 will produce 1 ounce of gold per year forever at a marginal extraction

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A mine costing $1000 will produce 1 ounce of gold per year forever at a marginal extraction cost of $250, with production commencing 1 year after the mine opens. Gold volatility is zero. What is the estimation of the mine?

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Derivatives Markets

ISBN: 9789332536746

3rd Edition

Authors: Robert McDonald

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Question Posted: Aug 12, 2015 02:49 AM

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A mine costing $1000 will produce 1 ounce of gold per year forever at a marginal extraction

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As in Example 171 we receive an underlying cash flow worth 300003 10000 by paying a strike of ...View the full answer

Derivatives Markets

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