An automobile manufacturing company in Country X is considering the construction and operation of a large plant on the eastern seaboard of the United States Their MARR 20 per year on a before tax basis (77iis is a market rate relative to their currency in Country X ) The study period used by the co...

i fm 20 per year f e 22 per year Current exchange rate 1 ...

An automobile manufacturing company in Country X is considering the construction and operation of a large plant

Question:

An automobile manufacturing company in Country X is considering the construction and operation of a large plant on the eastern seaboard of the United States. Their = 20% per year on a before-tax basis. (77iis is a market rate relative to their currency in Country X.) The study period used by the company for this type of investment is 10 years. Additional information is provided as follows:
€¢ The currency in Country X is the Z-Kron.
€¢ It is estimated that the U.S. dollar will become weaker relative to the Z-Kron during the next 10 years. Specifically, the dollar is estimated to be devalued at an average rate of 2.2% per year.
€¢ The present is 92 Z-Krons per U.S. dollar.
€¢ The estimated before-tax net cash flow (in U.S. dollars) is as follows:

Based on a before-tax analysis, will this project meet the company's economic decision criterion?

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...