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9. (15pts) PrizerTech is proposing to construct a new plant in two countries. The two prime candidates are Italy and China. The forecasted cash flows
9. (15pts) PrizerTech is proposing to construct a new plant in two countries. The two prime candidates are Italy and China. The forecasted cash flows from the proposed plants are as follows: C2 Italy (billions of euros) China (billions of RMB) -6 -55 C1 2.5 20 3.4 25 C3 3.9 40 C4 4.2 65 The spot exchange rate for euros is $1.23/, while the rate for RMB is \6.75/$. The interest rate is 2% in the United States, 5% in Italy for Euro investment, and 7% in China. The financial manager has suggested that, if the cash flows were stated in dollars, a return in excess of 12.5% would be acceptable. A. Calculate the NPV in dollars for the facility in Italy. B. Calculate the NPV in dollars for the facility in China. C. Calculate the NPV in euro for the facility in Italy. D. Calculate the NPV in RMB for the facility in China
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