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An investor offers you the following investment deal: If you give $2,000 to the investor today, they will guarantee you a payment of $2,300
An investor offers you the following investment deal: If you give $2,000 to the investor today, they will guarantee you a payment of $2,300 in two years. Assume you believe the average return you would 1 receive if you invested this money yourself, rather than give it to the investor, is 7%. 2 3 4 5 Cash Flows: Year 0 2 ($2,000) $2,300 7 a) What is the NPV of this investment? Place your answer with two decimal places in cell B7. 8 b) If you think 7% represents the average you would earn on other investments, should you take this 10 investment opportunity? Choose the best option in cell A11. 11 12
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