Question: You run a construction firm. You have just won a contract to build a government office building. Building it will require an investment of $10

You run a construction firm. You have just won a contract to build a government office building. Building it will require an investment of $10 million today and $5 million in one year. The government will pay you $20 million in one year upon the building’s completion. Assume the cost of capital is 10%.

a. What is the NPV of this opportunity?

b. How can your firm turn this NPV into cash today?

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