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A project in South Korea requires an initial investment of #2 billion. The project is expected to generate net cash flows to the subsidiary of
A project in South Korea requires an initial investment of #2 billion. The project is expected to generate net cash flows to the subsidiary of #3 billion and #4 billion in the 2 years of operation respectively. The project has no salvage value. The current value of the won is #1,100 per U.S. dollar and the value of the Korean won is expected to remain constant over the next 2 years. Calculate the Net Present Value (NPV) of this project if the required rate of return is 10 percent (10 marks)
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