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A project has an initial cost of 80,000 and is expected to return 10,000 the first year, 40,000 the second year, and 50,000 the third
A project has an initial cost of 80,000 and is expected to return 10,000 the first year, 40,000 the second year, and 50,000 the third and final year. The current spot rate is .56. The nominal risk-free return is 5 percent in the U.K. and 7 percent in the U.S. The return relevant to the project is 7.8 percent in the U.K. and 8.1 percent in the U.S. What is the net present value of this project in U.S. dollars? Compute using home currency and foreign currency approaches, respectively.
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