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Your brother wants to borrow $9,750from you. He has offered to pay you back $12,500in a year. If the cost of capital of this investment

Your brother wants to borrow $9,750from you. He has offered to pay you back $12,500in a year. If the cost of capital of this investment opportunity is 8%,what is itsNPV? Should you undertake the investmentopportunity? 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 8%, what is itsNPV?

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