rate positively ..
ans a) | ||||||||||||
Computation of NPV | ||||||||||||
year | Cash outflow | Cash inflow | Net cash flow | PVIF @ 10.3% | Present value | |||||||
0 | -10.3 | -10.3 | 1 | (10.30) | ||||||||
1 | -5.3 | 20.1 | 14.8 | 0.906618314 | 13.42 | |||||||
3.12 | ||||||||||||
ans = | 3.12 | million | ||||||||||
ans b) | firm will receive after 1 year= | 20.1 | mil | |||||||||
Present value = 20.1/1.103 | 18.22 | mil | ||||||||||
Ans = | B) The firm can borrow $18.22 million today and pay it back with 10.3% using the 20.1 million it will receive from the government. | |||||||||||
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