Question
Your brother wants to borrow $9,500 from you. He has offered to pay you back $12,000 in a year. If the cost of capital of
Your brother wants to borrow $9,500 from you. He has offered to pay you back $12,000 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.
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Options Futures And Other Derivatives
Authors: John C. Hull
11th Edition
013693997X, 9780136939979
