Question: Assume that you have an investment opportunity that will produce cash flows (with certainty) following the pattern below. The investment requires a $500 investment today. Year Cash Flow 1 $600 2 $300 3 $300 4 $200 5 -1000
a. Use Excel to graph the NPV of these cash flows as a function of the discount rate.
b. Would you invest in this project if the opportunity cost were 20%? Explain why in a sentence or two.