Question
You have been offered an investment opportunity.if you invest $11,600 today you will get $580 in one year, $1,740 in 2 years, and $ 11,600
You have been offered an investment opportunity.if you invest $11,600 today you will get $580 in one year, $1,740 in 2 years, and $ 11,600 10 years from now.
A. what is the NPV of the opportunity if the cost of capital is 5.8% per year? should you take the opportunity?
B. What is the NPV of the opportunity if the cost of capital is 1.8% per year? Should you take it now?
C. You have another opportunity to invest $100,000 now in return for $80,000 in one year and $30,000 in 2 years. If your cost of capital is 9.0%, what is the NPV of this investment?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started