You own a food truck. To operate, you have to buy $2,000 worth of ingredients and 800 gallons of gasoline, and you will produce $10,000 in sales. For simplicity, assume that all production, sales, costs, etc. happen instantaneously at t=1.- gas price today is $6 per gallon- gas price has σ = 0.5- it costs 7% to store gas- r=4%
a. Assume you have signed a contract with the city and you have to operate at t=1 no matter what... you have no choices.

What is this project worth today?

Answer rating: 100% (QA)

To calculate the projects worth today we need to discount the future cash flows to their present val... View the full answer