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15. Multinational capital budgeting International Machinery Company (IMC) is a Swedish multinational manufacturing company. Currently, IMC's financial planners are considering undertaking a 1-year project in
15. Multinational capital budgeting International Machinery Company (IMC) is a Swedish multinational manufacturing company. Currently, IMC's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2,450 and a cash inflow the following year of $4,150. IMC estimates that its risk-adjusted cost of capital is 15%. Currently, 1 U.S. dollar will buy 6.8 Swedish kronas. In addition, 1-year risk-free securities in the United States are yielding 5%, while similar securities in Sweden are yielding 4%. If IMC undertakes the project, what is the net present value and rate of return of the project for IMC in home currency (Swedish Kronas)? 1158.707645.427879.137809.61
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