calculate the NPV

| January 22, 2015

1. You have been offered the following investment opportunity: if you invest $16,000 today, you will receive $4,000 two years from now, $7,000 four years from now, and $9,000 six years from now.

a) What is the NPV of the opportunity if the interest rate is 6% per year? Should you take this opportunity?

b) What is the NPV of the opportunity if the interest rate is 2% per year? Should you take this opportunity?

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2018DISC
Bond valuations
Constant Growth Rate

Category: Essay Topics

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