You have been offered a unique investment opportunity. If you invest $9,600 today, you will receive $480 one year from now, $1,440 two years from now, and $9,600 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.4% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.4% per year? Should you take it now? a. What is the NPV of the opportunity if the cost of capital is 5.4% per year? If the cost of capital is 5.4% per year, the NPV is $. (Round to the nearest cent.)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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You have been offered a unique investment opportunity. If you invest $9,600 today, you will receive $480 one year
from now, $1,440 two years from now, and $9,600 ten years from now.
a. What is the NPV of the opportunity if the cost of capital is 5.4% per year? Should you take the opportunity?
b. What is the NPV of the opportunity if the cost of capital is 1.4% per year? Should you take it now?
a. What is the NPV of the opportunity if the cost of capital is 5.4% per year?
If the cost of capital is 5.4% per year, the NPV is $. (Round to the nearest cent.)
Transcribed Image Text:You have been offered a unique investment opportunity. If you invest $9,600 today, you will receive $480 one year from now, $1,440 two years from now, and $9,600 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.4% per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.4% per year? Should you take it now? a. What is the NPV of the opportunity if the cost of capital is 5.4% per year? If the cost of capital is 5.4% per year, the NPV is $. (Round to the nearest cent.)
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