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Nelly has offered you an opportunity to invest in his bait shop in Florida. The deal involves you investing $1,000 today, with an expected annual
Nelly has offered you an opportunity to invest in his bait shop in Florida. The deal involves you investing $1,000 today, with an expected annual return of 8% over the next year. (Hurricanes usually wipe out the investment in a year.) Your next best alternative is a $1,000 CD which would pay $1,050 in one year. What is the NPV of this investment?
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