Calculate cash floor from refinery revenue in nominal dollar

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Reference no: EM13805846

A refinery made $1,000,000 last from selling 250,000 barrels for $4 each. In response to refinery prices increasing 3.5% each year, the refinery created a project that will increase production by 5% each year for five years. General inflation is expected to increase 4.7% each year.

a. Calculate cash floor from refinery revenues in nominal dollars for years 1-5.

Refinery revenue (nominal)

year1:

year2:

year3:

year4:

year5:

b. Calculate cash flow from refinery in real dollars through years1-5.

Refinery revenue (real)

year1:

year2:

year3:

year4:

year5:

Reference no: EM13805846

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