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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

    1. 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 comple- tion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is 10%.

      1. What is the NPV of this opportunity?

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

 

 

 

May 28 2020 View more View Less

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