Question: You are considering a project which generates $ 1 0 , 0 0 0 in 6 months and $ 2 0 , 0 0 0

You are considering a project which generates $10,000 in 6 months and $20,000 in one year and will run you $26,000 today. You know these cash flows are exact. You also have the Treasury yield curve from the Wall Street Journal in front of you and see that the 6-month T-bill is trading at a 4% rate and the one-year T-bond (which pays coupons in 6-months and one-year) is trading at par (100) with a yield of 6%. Rates are corporate bond equivalent (CBE). Should you invest in this project?

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