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Memphic Memphic
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6 years ago
Assuming that Dewey's cost of capital is 12% EAR, then the NPV of his retainer offer is closest to:
A) -$7500
B) -$7400
C) $6000
D) $7400
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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Replies
wrote...
6 years ago
D
Explanation:  D) Step #1  Monthly Interest Rate   - 1 = .009488793
Step #2  Monthly Opportunity Cost = 8 × $250 = $2000
Step #3
NPV = $30,000 - 2000   -   = $7416.97
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