1. Why would 3P Turbo consider investing in Brazil? For 3P Turbo, what are the advantages and disadvantages of having a manufacturing facility in Brazil? 2. How would you describe the economic and political environments of Brazil at that time? What about the Brazilian automobile industry? What are the risks and opportunities? 3. For the cross-border valuation analysis, what discount rate would you use to discount the Brazilian real cash flows of the project? Is it possible to conduct cross-border valuation without calculating foreign currency cost of capital? 4. How do you account for the low interest loan provided by the German vendor in the valuation analysis? 5. Based on the quantitative analysis of the project i.e. the NPV, does this project look attractive for 3P Turbo? 6. What are the questions Jason should ponder before deciding on the investment? Should Jason invest in Brazil?

3P Tu n Review Data View Deve Formulas File Home Insert Page Layout PROTECTED VIEW Be carefu files from the Internet can contain viruses. Unless you need to edit, it's x fo 15 H B D E F G Exhibit 1. Brazilian Investment Cash Flows Forecast (Price and Costs Increased by 9% Each Year) (thousands of R$) 1 2 Year 2016 2017 2018 2019 2020 2021 Projected Volume 28 38 44 50 3 (000) 4 $ 2,400 $ 2,616 $ 2,851 $3,108 $3,388 $ 1,050 $ 1,145 $1,248 $ 1,360 $ 1,482 5 Price Per Unit (R$) Production cost Per Unit (R$) Selling Cost Per Unit (R$) Administrative cost Per Unit (RS) 424 389 $ $ 300 $ 356 $ 327 $ 141 $ 100 $ 119 sh 130 s 109 $ coco me = + 0 Revenue 10 Production Cost 11 Gross Profit Selling Cost Administrative 14 Depreciation 15 EBIT Taxes on Profits After-tax Profit Add Back 18 Depreciation Total Operating 19 Cash Flows Cost of building and 20 equipment Cost of Training 21 After Tax 22 Salvage Value 23 24 $ 67,200 $ 78,480 $108,355 $136,755 $169,390 $(29,400) S(34,335) S(47,405) $(59,830) $(74,108) $ 37,800 $ 44,145 $ 60,950 $ 76,925 $ 95,282 $ (8.400) $ (9.810) $(13.544) S(17.094) $(21,174) $ (2,800) $ (3,270) S (4.515) S (5.698) S (7,058) $(24.000) $(24,000) $(24,000 $(24,000) $(24,000) 2.600 S 7,065 S 18.890 $ 30.132 S43.050 $ (884) $ (2.402) $ (6.423) $(10.245) $(14,637) $ 1,716 $ 4,663 S 12.468 $ 19.887 $ 28.413 $ 24,000 $24,000 $ 24,000 $ 24,000 $ 24,000 $ 25,716 $ 28,663 S 36,468 $ 43.987: $ 52,413 $(120.000 S (6.600) $ 30,000 25 26 27 Sheet1 Sheet2