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You have been offered a unique investment opportunity. If you invest $20,000 ​today


You have been offered a unique investment opportunity. If you invest $20,000 ​today, you will receive $1,000 one year from​ now, $3,000 two years from​ now, and $20,000 ten years from now.

a. What is the NPV of the investment opportunity if the interest rate is 12% per​ year? Should you take the​opportunity?
b. What is the NPV of the investment opportunity if the interest rate is 8% per​ year? Should you take the opportunity?


SOLUTION PREVIEW
a.
Year
Cash flow
PV@12%
0
-20,000
($20,000.00)
1
1,000
$892.86


File name:  You have been offered.xls      File type: xls  PRICE: $5