Question
MY HOMEWORK IS TIMED PLEASE RESPOND AS SOON AS POSSIBLE PLESE. You have been offered a unique investment opportunity. If you invest $20,000 today, you
MY HOMEWORK IS TIMED PLEASE RESPOND AS SOON AS POSSIBLE PLESE.
You have been offered a unique investment opportunity. If you invest $20,000 today, you will receive $1,000 one year fromnow, $3,000 two years fromnow, and $20,000 ten years from now.
a. What is the NPV of the investment
opportunity if the interest rate is 10% peryear? Should you take the opportunity?
b. What is the NPV of the investment
opportunity if the interest rate is 6% peryear? Should you take theopportunity?
Take it because the NPV is equal to or greater than zero
or
Reject it because NPV is less than zero
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