1. Problem 14.13 (Capital Budgeting Example) Algo eBook Brower, Inc., just constructed a manufacturing plant in Ghana. The construction cost 11 billion Ghanaian cedi.
1. Problem 14.13 (Capital Budgeting Example) Algo eBook Brower, Inc., just constructed a manufacturing plant in Ghana. The construction cost 11 billion Ghanaian cedi. Brower intends to leave the plant open for three years. During the three years of operation, cedi cash flows are expected to be 4 billion cedi, 4 billion cedi, and 3 billion cedi, respectively. Operating cash flows will begin one year from today and are remitted back to the parent at the end of each year. At the end of the third year, Brower expects to sell the plant for 6 billion cedi. Brower has a required rate of return of 17 percent. It currently takes 8,900 cedi to buy 1 U.S. dollar, and the cedi is expected to depreciate by 6 percent per year. a. Determine the NPV for this project. Do not round intermediate calculations. Round your answer to the nearest dollar. Negative values, if any, should be indicated by a minus sign. $ Should Brower build the plant? Brower -Select- build the plant. b. Determine the NPV if the value of the cedi was expected to remain unchanged from its current value of 8,900 cedi per U.S. dollar over the course of the three years? Do not round intermediate calculations. Round your answer to the nearest dollar. Negative values, if any, should be indicated by a minus sign. $ Should Brower build the plant? Brower -Select- V build the plant.
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