You have an opportunity to invest $102000 now in return for $80200 in one year and...

You have an opportunity to invest $102000 now in return for $80200 in one year and $29400 in two years. If your cost of capital is 9.1% , what is the NPV of this investment?

Expert Solution

Current investment in year 0 = $102,000

Return as cash inflow in Year 1 = $80,200

Return as cash inflow in Year 2 = $29,400

Now, Calculating the NPV of this Investment by taking cost of capital as 9.1%:-

Year	Cash Flow of Opportunity ($)	PV Factor @9.1%	Present Value of Cash Flow of Opportunity ($)
0	(102,000.00)	1.00000	(102,000.00)
1	80,200.00	0.91659	73,510.54
2	29,400.00	0.84014	24,700.05
			(3,789.41)

So, NPV of this Investment is -$3,789.41

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jeff jeffy answered 1 year ago

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You have an opportunity to invest $102000 now in return for $80200 in one year and...

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