You have been offered a unique investment opportunity. If you invest $11,600 today, you will receive $580 one year from now, $1,740 two years from now, and $11,600 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.6 % per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.6 % per year? Should you take it now?
You have been offered a unique investment opportunity. If you invest $11,600 today, you will receive $580 one year from now, $1,740 two years from now, and $11,600 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.6 % per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.6 % per year? Should you take it now?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have been offered a unique investment opportunity. If you invest
$11,600 today, you will receive $580 one year from now, $1,740 two years from now, and $11,600 ten years from now.
a. What is the NPV of the opportunity if the cost of capital is 5.6 % per year? Should you take the opportunity?
b. What is the NPV of the opportunity if the cost of capital is 1.6 % per year? Should you take it now?
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