You have been offered a unique investment opportunity. If you invest $20,000 today, you will receive $1,000 one year from now, $3,000 two years from now, and $20,000 ten years from now.
a. What is the NPV of the investment opportunity if the interest rate is 12% per year? Should you take theopportunity?
b. What is the NPV of the investment opportunity if the interest rate is 8% per year? Should you take the opportunity?
TUTORIAL PREVIEW
a. 


Year 
Cash flow 

0 
20,000 
($20,000.00) 
1 
1,000 
$892.86  