5. You run a construction firm. You have just won a contract to build a government office...

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5. You run a construction firm. You have just won a contract to build a government office building. Building it will require an investment of $40 million today and $25 million in one year. The government will pay you $80 million in one year upon the building's completion. Assume the cost of capital is 12%.

a. What is the NPV of this opportunity?

b. How can your firm turn this NPV into cash today?

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Fundamentals Of Corporate Finance

ISBN: 9781292018409

3rd Global Edition

Authors: Berk, Peter DeMarzo, Jarrad Harford

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