You have been offered a unique investment opportunity. If you invest $10,800 today, you will receive $540 one year $1,620 two years from now, and $10,800 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.5% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.5% per year? Should you take it now?

You have been offered a unique investment opportunity. If you invest $10,800 today, you will receive $540 one year $1,620 two years from now, and $10,800 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.5% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.5% per year? Should you take it now?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 12P

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Question

You have been offered a unique investment opportunity. If you invest $10,800 today, you will receive $540 one year from ne
$1,620 two years from now, and $10,800 ten years from now.
a. What is the NPV of the opportunity if the cost of capital is 5.5% per year? Should you take the opportunity?
b. What is the NPV of the opportunity if the cost of capital is 1.5% per year? Should you take it now

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