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a. Calculating the NPV in ZAR using the ZAR equivalent cost of capital according to the Fisher Effect and then converting to USD at the
a. Calculating the NPV in ZAR using the ZAR equivalent cost of capital according to the Fisher Effect and then converting to USD at the current spot rate. b. Converting all cash flows from ZAR to USD at Purchasing Power Parity forecasted exchange rates and then calculating the NPV at the dollar cost of capital. Are the two dollar NPVs different or the same? Explain. c. What is the NPV in dollars if the actual pattern of ZAR/USD exchange rates is: S(0) = 3.75, S(1) = 5.7, S(2) = 6.7, S(3) = 7.2, S(4) = 7.7, and S(5) = 8.2
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