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Your brother wants to borrow $10,000 from you. He has offered to pay you back $13,000 in a year. If the cost of capital of
Your brother wants to borrow $10,000 from you. He has offered to pay you back $13,000 in a year. If the cost of capital of this investment opportunity is 9%, 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 9%, what is its NPV? The NPV of the investment is $ (Round to the nearest cent.) Should you undertake the investment opportunity? Since the NPV is , you should 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 %. (Round to two decimal places.) The maximum deviation allowable in the cost of capital is %. (Round to two decimal places.)
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