Your grandmother gives you $75,000 to be invested in one of three opportunities: real estate, regular bonds, or zero coupon bonds. If you invest the entire amount in just one of these opportunities with the expected cash flows shown below, which investment offers the highest NPV? Assume for simplicity that an 8 percent discount rate is appropriate for all three investments. Year 1 Year 2 Year 3 Year 4 Year 5 Total All Payments Real Estate $3,750 $3,863 $3,978 $4,098 $98,140 $113,828 Bond $5,925 $5,925 $5,925 $5,925 $80,925 $104,625 Zero Coupon $0 $0 $0 $0 $105,000 $105,000 Solution