Here is the Question: "What is the net present value of a firm's investment in a US Treasury security yielding 5 percent and maturing in one year? Hints: what is the opportunity cost of capital? Ignore taxes" (Reference: Brealey, R. and Myers, S. (2003) Question 1, Chapter 2 Persent Values, the Objectives of the Firm, and Corporate Governance, Principles of Corporate Finance, 7th ed. McGraw-Hill, New York. ) The problem is how to work out this question without knowing the amount of investment? Cheers. |