Write down the formulas for an investments NPV and rate of return. Prove that NPV is positive

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Write down the formulas for an investment’s NPV and rate of return. Prove that NPV is positive only if the rate of return exceeds the opportunity cost of capital.

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...
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Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

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