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You are considering investing in a start up company. The founder asked you for $270,000 today and you expect to get $960,000 in 14 years.

You are considering investing in a start up company. The founder asked you for $270,000

today and you expect to get $960,000

in 14years. Given the riskiness of the investmentopportunity, your cost of capital is 23%.

What is the NPV of the investmentopportunity? Should you undertake the investmentopportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.

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