18.7)

answer all steps and show calculations

Domestic NPV approach, Farbucks is thinking of expanding to South Korea. The current indirect rate for dollars and South Korean won is 992 won per dolar. The expected infabion nte in 5 south Korea should hover near 0.7% for the next five years. The expected U.S. inflation rate should stay around 3.9%. The discount rate for expanding is 13% for Farbucke. Given the following projectied cash flows for the expansion project, use the domestic NPV approach to determine whether Farbucks should expand to South Korea. Year 0: intial invostmont costs of 90,000,000 won per cottee shop Year 1 cash flow. 15,000,000 won Year 2 cash flow, 30,000,000 won Your 3 cash flow: 70,000,000 won Year 4 ceash flow. 85,000,000 won Year 5 cash flow: 35,000.000 won Domestic curtency asproach in mustiational capital budgeting consists of the follosing step: Step 1: Calculate the forward exchange rates. Step 1: Caloulate the forward exchange rates: Step 2: Corvert all cash fows in foregn currency into dollars using current and forward exchange rates. Step 3. Corver al future dolars into present value with the domestic discount rale. Step 4: Add the net presers value of the outtow and inflow. 5lep 4: Add the net present value of the outhow and inflow. Step t5. Accept the project if its cet present value (NPV) is positive and reject it negasive