You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.0 million today and $5.0 million in one year. The government will pay you $20.0 million in one year upon the building's completion. Suppose the interest rate is 10.0%. a. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? a. What is the NPV of this opportunity? The NPV of the proposal is $ million. (Round to two decimal places.)

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
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You run a construction firm. You have just won a contract to build a
government office complex. Building it will require an investment of
$10.0 million today and $5.0 million in one year. The government will
pay you $20.0 million in one year upon the building's completion.
Suppose the interest rate is 10.0%.
a. What is the NPV of this opportunity?
b. How can your firm turn this NPV into cash today?
a. What is the NPV of this opportunity?
The NPV of the proposal is $
million. (Round to two decimal places.)
Transcribed Image Text:You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.0 million today and $5.0 million in one year. The government will pay you $20.0 million in one year upon the building's completion. Suppose the interest rate is 10.0%. a. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? a. What is the NPV of this opportunity? The NPV of the proposal is $ million. (Round to two decimal places.)
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