Your brother wants to borrow $10,000 from you. He has offered to pay you back $12,000 in a year. If the cost of capital of this investment opportunity is 10%, what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it t

Your brother wants to borrow $10,000 from you. He has offered to pay you back $12,000 in a year. If the cost of capital of this investment opportunity is 10%, what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it t

Your brother wants to borrow $10,000 from
you. He has offered to pay you back $12,000 in a year. If the cost of capital
of this investment opportunity is 10%, what is its NPV? Should you undertake
the investment opportunity? Calculate the IRR and use it to determine the
maximum deviation allowable in the cost of capital estimate to leave the
decision unchanged.


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