Grenouille Properties (U.S.) expects to receive cash dividends from a French joint venture over the coming three

Question:

Grenouille Properties (U.S.) expects to receive cash dividends from a French joint venture over the coming three years. The first dividend , to be paid December 31, 2011, is expected to be €720,000. The dividend is then expected to grow 10.0% per year over the following two years. The current exchange rate (December 30, 2010) is $1.3603/€. Grenouille's weighted average cost of capital is 12%.

a. What is the present value of the expected euro dividend stream if the euro is expected to appreciate 4.00% per annum against the dollar?

b. What is the present value of the expected dividend stream if the euro were to depreciate 3.00% per annum against the dollar?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... 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...