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You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.2
You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.2 million today and $4.9 million in one year. The government will pay you $21.5 million in one year upon the building's completion. Suppose the interest rate is 10.7%.
a. What is the NPV of this opportunity?
b. How can your firm turn this NPV into cash today?
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