Problem $11-6$ Market values

Suppose the current price of gold is $$1,500$ an ounce. Hotshot Consultants advises you that gold prices will increase at an average rate of $12\%$ for the next two years. After that the growth rate will fall to a long$-$run trend of $1\%$ per year. Assume that gold prices have a beta of $0$ and that the risk$-$free rate is $5\mathrm{.}5\%.$ What is the present value of $1\mathrm{.}5$ million ounces of gold produced in $8$ years?

Note: Do not round intermediate calculations. Enter your answer in billions rounded to $2$ decimal places.

Present value

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