You have an opportunity to invest $107,000 now in return for $79,300 in one year and...

You have an opportunity to invest $107,000 now in return for $79,300 in one year and $29,200 in two years. If your cost of capital is 9.1%, what is the NPV of this investment?

Expert Solution

Net present value will be calculated as follows

= (-initial investment+cash inflows/(1+r)^n)

= (-107000+(79300/1.091)+(29200/1.091)^2)

= (-107000+72685.6+24532.022)

= -9782.38

Net present value of this opportunity is negative so it's not to be accepted

jeff jeffy answered 2 years ago

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You have an opportunity to invest $107,000 now in return for $79,300 in one year and...

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