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Your brother wants to borrow $9,750 from you. He has offered to pay you back $12,750 in a year. If the cost of capital of
Your brother wants to borrow $9,750 from you. He has offered to pay you back $12,750 in a year. If the cost of capital of this investment opportunity is 11%,
1) What is its NPV? Should you undertake the investment opportunity?
2) 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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