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Elden [556K]
3 years ago
5

3. 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 $10 million today and $5 million in one year. The government will pay you $20 million upon the building’s completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate (i.e., the discount rate) is 10%. What is the NPV of this opportunity?
Business
1 answer:
Gre4nikov [31]3 years ago
3 0

Answer:

NPV= $1,983,471.1

Explanation:

Giving the following information:

To calculate the present value you need to use the Net Present Value. The NPV is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

The formula is:

NPV= -Io + ∑[Rt/(1+i)^t]

where:

R t​     =Net cash inflow-outflows during a single period t

i=Discount rate of return that could be earned in alternative investments

t=Number of timer periods

NPV= -10,000,000 - 5,000,000/1.10 + (20,000,000/1.10^2)

NPV= $1,983,471.1

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You're prepared to make monthly payments of $400, beginning at the end of this month, into an account that pays 5 percent intere
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Answer:

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Explanation:

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6 0
3 years ago
1. Andy works as a sales associate in a department store. His supervisor gave him a sales goal of 10,000 suits for the year.If A
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3 years ago
Pepsi Cola has entered into a long-term contract with a South African beverage business. The contract calls for the South Africa
Helen [10]

Answer:

<u>Licensing </u> is the correct answer.

Explanation:

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Companies generally license: design, patents, trademarks, copyrights and others whose purpose is to assist in increasing profitability and expanding business.

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djyliett [7]

Answer:

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