The price of gold is currently $1,200 per ounce. forward contracts are available to buy or sell gold at $1,400 per ounce for delivery in one year. an arbitrageur can borrow 1 money at 5% per annum. what should the arbitrageur do? assume that the cost of storing gold is zero and that gold provides no income.

The modern medicine company is considering a new project which will require an initial cash investment of $425,000. the project will produce no cash flows for the first 2 years. the projected cash flows for years 3 through 6 are $31,000, $56,000, $250,000, and $429,000, respectively. how long will it take the firm to recover its initial investment in this project?