*Please solve using Excel and show formulas.** Permian Partners (PP) produces from aging oil fields in west Texas. Production is 1.97 million barrels per year in 2018, and it will be stable for the foreseeable future. Costs of production, transportation, and administration add up to $26.70 per barrel. The average oil price was $66.7 per barrel in 2018, and it will not change in the future. PP has 8.7 million shares outstanding. The cost of capital is 11%. All of PP’s net income is distributed as dividends. For simplicity, assume that the company will stay in business forever and that costs per barrel are constant at $26.70. Also, ignore taxes. Given more time you would compute the net income for 2019, which is 62,744,500. Assume that this net income will remain constant for the foreseeable future (there will be no growth in the net Income). Question: What is the ending 2018 value of one PP share? Multiple Choice
**Please solve using Excel and show formulas.**
Permian Partners (PP) produces from aging oil fields in west Texas. Production is 1.97 million barrels per year in 2018, and it will be stable for the foreseeable future. Costs of production, transportation, and administration add up to $26.70 per barrel. The average oil price was $66.7 per barrel in 2018, and it will not change in the future.
PP has 8.7 million shares outstanding. The cost of capital is 11%. All of PP’s net income is distributed as dividends. For simplicity, assume that the company will stay in business forever and that costs per barrel are constant at $26.70. Also, ignore taxes.
Given more time you would compute the net income for 2019, which is 62,744,500. Assume that this net income will remain constant for the foreseeable future (there will be no growth in the net Income).
Question: What is the ending 2018 value of one PP share?
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$71.9
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$64.1
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$68.6
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$70.9
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$65.6
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