Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 10

Good news! Gold has just been discovered in your backyard. Mining engineers tell you that you can extract five ounces of gold per year forever. Gold is currently selling for $1,000 per ounce,and that price is not expected to change. If the discount rate is 5 percent per year,estimate the total value of your gold mine.