Question: Present Value and the NPV Decision Rule 9 . You run a construction firm. You have just won a contract to construct a government office
Present Value and the NPV Decision Rule
You run a construction firm. You have just won a contract to construct a government office building. It will take one year to construct it requiring an investment of $ million today and $ million in one year. The government will pay you $ million upon the building's completion. Suppose the cash flows and their times of payment are certain, and the riskfree interest rate is
a What is the NPV of this opportunity?
b How can your firm turn this NPV into cash today?
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