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Your brother wants to borrow $10,250 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 $10,250 from you. He has offered to pay you back $13,000 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?

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