QUESTION
3-9. You run a construction firm. You have just won a contract to build a government office building. Building it will t
Category: Business
Subject: Finance
Due Date: 04/26/2018
Question Asked: 2018-04-18 04:48:45
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User: best_tutor
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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?
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3-9. You run a construction firm. You have just won a contract to build a government office building. Building it will t
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