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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?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92329056

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