Question
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
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 $8.75 million today and $5.00 million in one year. The government will pay you $21.00 million upon the building's completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is 9%
. 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 -_____million.
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