Question
You have been offered a unique investment opportunity. If you invest $11,500 today, you will receive $575 one year from now, $1,725 two years from
You have been offered a unique investment opportunity. If you invest $11,500 today, you will receive
$575 one year from now, $1,725 two years from now, and $11,500 in ten years.
a. What is the NPV of the opportunity if the cost of capital is 5.4% per year? Should you take the opportunity?
b. What is the NPV of the opportunity if the cost of capital is 1.4% per year? Should you take it now?
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Public Finance
Authors: Harvey Rosen
6th International Edition
0071121234, 978-0071121231
