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2. In problem one, the assumption is the revalued against the rupee as indicated in the problem, and that the euro and the move together,
2. In problem one, the assumption is the revalued against the rupee as indicated in the problem, and that the euro and the move together, in lockstep, in terms of the ER. Presuppose additionally, we know the euro and the $ revalue against the rupee by what is indicated in problem one, and the and euro continue to appreciate against the rupee for the next 20 years. Before we presupposed the sales to Europe do not alter due to the rupee depreciation. However, now we make a huge change in the assumptions. How would the results of problem one alterif we assume that, as a result of the rupee depreciation, sales from India to Europe rise intertemporally for 20 years. Furthermore, presuppose the sensitivity of demand is high for the Indian product in Europe (how European customers see it.) Elaborate on the possible altered effect of the NPV of the Indian investment . Note the only geographical areas involved are India, Europe and the US. Treat Europe and the US as one entity. There is NO OTHER COUNTRY If we assume that sales from India to Europe rise inter temporally for 20 years, the results of problem one would alter significantly. The NPV of the Indian investment would increase significantly, as the company would be able to sell more products at a higher price. Additionally, the price elasticity of demand would have a significant impact on the NPV of the investment, as a higher price elasticity would lead to a higher NPV. Please answer one full page of word doc
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