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Author Question: Peter has a business opportunity that requires him to invest $10,000 today, and receive $12,000 in ... (Read 32 times)

Jipu 123

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on: Jul 9, 2019
Peter has a business opportunity that requires him to invest $10,000 today, and receive $12,000 in one year.  He can either use $10,000 that he already has for this investment or borrow the money from his bank at an interest rate of 10%. However, the $10,000 he has right now is needed for urgent repairs to his home, repairs that will cost at least $15,000 if he delays them for a year.  What is the best alternative for Peter out of the following choices?
◦ Yes, since he can borrow the $10,000 from a bank, repair his home, invest $10,000 in the business opportunity, which, since it has a NPV > 0 will mean he will still come out ahead after repaying the loan.
◦ Yes, since the net present value (NPV) of the investment, should he take it, is greater than the net present value (NPV) of the home repairs if he delays them for one year.
◦ Yes, since the net present value (NPV) of the investment is greater than zero he can invest the $10,000 in the business opportunity, and then next year use this money plus the benefit from this money to make the necessary home repairs.
◦ No, since the net present value (NPV) of the investment, should he take it, is less than the net present value (NPV) of the home repairs if he delays them for one year.
Fundamentals of Corporate Finance ¦ Berk, DeMarzo, Harford ¦ 2nd Edition
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Marked as best answer by Jipu 123 on Jul 9, 2019

LegendaryAnswers

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Reply #1 on: Jul 9, 2019
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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Jipu 123

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Reply 2 on: Jul 9, 2019
Thanks for the timely response, appreciate it

xiaomengxian

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Reply 3 on: Yesterday
Wow, this really help

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