You run a construction firm. You have just won a contract to build a government office building. It will take one year to construct it requiring an investment of

$10.00

million today and

$5.00

million in one year. The government will pay you

$20.00

million upon the building's completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is

10%.

a. What is the NPV of this opportunity?

b. How can your firm turn this NPV into cash today?

a. What is the NPV of this opportunity?

The NPV of this opportunity is

$nothing

million. (Round to two decimal places.)

b. How can your firm turn this NPV into cash today?(Select from the drop-down menus.)

The firm can borrow

$10.00 million

$5.00 million

$20.00 million

$3.63 million

$4.55 million

$18.18 million

today, and pay it back with

10%

interest using the

$5.00 million

$10.00 million

$4.55 million

$20.00 million

$18.18 million

$3.63 million

it will receive from the government. The firm can use

$4.55 million

$3.63 million

$10.00 million

$5.00 million

$20.00 million

$18.18 million

of the

$10.00 million

$18.18 million

$20.00 million

$4.55 million

$3.63 million

$5.00 million

to cover its costs today and save

$20.00 million

$4.55 million

$5.00 million

$10.00 million

$18.18 million

$3.63 million

in the bank to earn

10%

interest to cover its cost of

$3.63 million

$5.00 million

$10.00 million

$20.00 million

$4.55 million

$18.18 million

next year. This leaves

$20.00 million

$18.18 million

$3.63 million

$5.00 million

$4.55 million

$10.00 million

in cash for the firm today.