a. Find the euro-zone cost of capital for this international project.

b. What is the euro-dominated NPV of this project?

c. What is the dollar-denominated NPV of this project?

Consider the following international investment opportunity: Year 0 Year 1 Year 2 Year 3 + 50,000 15,000 15.000 20,000 The current exchange rate is $1.60 = 1.00. The inflation rate in the U.S. is 3 percent and in the euro-zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent