Question

you have an opportunity to invest $105,000 now and in return for $80,200 in one year...

you have an opportunity to invest $105,000 now and in return for $80,200 in one year and $29,900 in two years. if your cost of capital is 8.7% what is the NPV of this investment?

The NPV will be $____
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Answer #1

Solution

Here

C0 is the initial investment= 105000

r= discounting rate = cost of capital= 8.7%

Ct= Cashflow in year t, i.e for t=1 cashflow=80200 and for t=2 cashflow = 29900

T= Total number of years= 2

Excel formula

Therefore NPV=99086.3843- 105000

= -5913.6157

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