Problem 1. Net Present Value. You’re in charge of a construction project for the next Olympics games. Suppose that the i

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Problem 1 Net Present Value You Re In Charge Of A Construction Project For The Next Olympics Games Suppose That The I 1 (227.84 KiB) Viewed 48 times

Problem 1. Net Present Value. You’re in charge of a construction project for the next Olympics games. Suppose that the interest rate is 6%. The project requires investment in the first two periods, promises a return in the following three periods, after which it can be sold. You anticipate the following payment schedule: Initial Cost End of Year 1 End of Year 2 End of Year 3 End of Year 4 -250 -200 80 120 340 Discount rate Present value a) Calculate the present value of the stream of payments. What is the Net Present Value of the project? Should it be undertaken? b) What is the value of the project at the beginning of Year 3 (in Year 3 dollars)?