You have been offered a unique investment opportunity. If you invest $25,000 today, you will receive $1,250 one year fromnow, $3,750 two years fromnow, and $25,000 ten years from now.

a. What is the NPV of the investment opportunity if the interest rate is 8% peryear? Should you take theopportunity?

b. What is the NPV of the investment opportunity if the interest rate is 4% peryear? Should you take theopportunity?

a. What is the NPV of the investment opportunity if the interest rate is 8% peryear?

The NPV of the investment opportunity if the interest rate is 8% per year is $

nothing

. (Round to the nearestdollar.)

Should you take the investment opportunity(Select the best choicebelow.)

A.

RejectitbecausetheNPVislessthan0.

B.

TakeitbecausetheNPVisequaltoorgreaterthan0.

b. What is the NPV of the investment opportunity if the interest rate is 4% peryear?

The NPV of the investment opportunity if the interest rate is 4% per year is $

nothing

. (Round to the nearestdollar.)

Should you take the investment opportunity (Select the best choicebelow.)