Solved: Determine the npv of the opportunity, Finance Basics

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Determine the npv of the opportunity

Problem: You have the opportunity to make an investment of $900,000. If you make this investment, you make $12,000, $250,000 and $800,000 one, two and three years from today, respectively. The discount rate is 12%

1) Should you make this investment?

2) What is the NPV (net present value) of this opportunity?

3) If the discount rate is 11%, should you invest? what is the NPV?

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Finance Basics: Determine the npv of the opportunity

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Finance Basics: Determine the npv of the opportunity

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