You have an opportunity to invest $104,000 now in return for $79,400 in one year and...

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Question

You have an opportunity to invest $104,000 now in return for $79,400 in one year and $30,100 in two years. If your cost of ca

Answer 1

Answer #1

Cash Flows:
Year 0 = -$104,000
Year 1 = $79,400
Year 2 = $30,100

Cost of Capital = 8.50%

NPV = -$104,000 + $79,400/1.085 + $30,100/1.085^2
NPV = -$104,000 + $98,748.33
NPV = -$5,251.67

The NPV will be -$5,251.67

Answer 2

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