Question
Your brother wants to borrow $ 10 comma 750 from you. He has offered to pay you back $ 13 comma 250 in a year.
Your brother wants to borrow
$ 10 comma 750
from you. He has offered to pay you back
$ 13 comma 250
in a year. If the cost of capital of this investment opportunity is
12 %
,
what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.
If the cost of capital of this investment opportunity is
12 %
,
what is its NPV?
The NPV of the investment is
$nothing
.
(Round to the nearest cent.)
Should you undertake the investment opportunity?
Since the NPV is
positive
negative
,
you should
take
not take
the deal! (Select from the drop-down menus.)
Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.
The IRR is
nothing
%.
(Round to two decimal places.)
The maximum deviation allowable in the cost of capital is
nothing
%.
(Round to two decimal places.)
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