You run a construction firm. You have just won a contract to build a government office building. Building it will take one year and require an investment of $9.78 million today and $5 million in one year. The government will pay you $22.5 million upon the building's completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is 10%. What is the NPV of this opportunity?

You run a construction firm. You have just won a contract to build a government office building. Building it will take one year and require an investment of $9.78 million today and $5 million in one year. The government will pay you $22.5 million upon the building's completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is 10%. What is the NPV of this opportunity?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 20P

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