You run a construction firm. You have just won a contract to build a government office building. Building it will require one year and require an investment of $10.42 million today and $5.00 million in one year. The government will pay you $25.00 million upon the building's completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is 10%.
a. What is the NPV of this opportunity?
b. How can your firm turn this NPV into cash today?