Question

There is a goose that lays golden eggs, one each year, arriving at the end of the year. Each egg weighs one pound. The price of gold is currently $1,247 per ounce (16 ounces in a pound), and this is your best guess for the price going forward. You expect the goose to live 10 years (thus laying 10 eggs). How much is this goose worth today if the discount rate is 8%

Answer 1

Answer:

$133,880

Explanation:

Missing word "How much is this goose worth today?"

Each year 1 golden egg, we get which weighed at 1 pond

1 pound = 16 ounce

Therefore 1 golden egg = 16 ounce

Therefore 1 golden egg = 16 ounce * $1,246/ounce

Therefore 1 golden egg = $19,952

Therefore  for 10 years discounted at 8%, the worth of the goose shall be

= Yearly cash flow * Sum of D.F.8%, 10 years

= $19,952 * 6.7101

= $133,880

So, the worth of the goose today is $133,880