3-9. You run a construction firm. You have just won a contract to build a government office building.
Building it will take one year and require 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 is 10%.
a. What is the NPV of this opportunity?
b. How can your firm turn this NPV into cash today?