Pam Scot, the Financial Manager of Wildcat Oil Company, can purchase from Sam Long Petroleum the right to a $1000 loyalty payment fifteen years from now. Pam believes her company opportunity cost should be 9% on investments of this level of risk (that is the amount of return she believes she can make on other investments of similar risk). 

How much should Pam be willing to pay for the right to the royalty payment?

Answer rating: 100% (QA)

To decide the amount Pam ought to pay for the right to the 1000 soverei... View the full answer