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Part $1$

You are considering investing in a start up company. The founder asked you for

$ $210$ comma $000$$$210,000$

today and you expect to get$$

$ $930$ comma $000$$$930,000$

in

$1010$

years. Given the riskiness of the investment$$ opportunity, your cost of capital is

$25\%25\%.$

What is the NPV of the investment$$ opportunity? Should you undertake the investment$$ opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.