A proposed automative plant in South America will produce automobiles in Brazil Brazilian currency is the real The following facts apply a)What is the NPV of investing today b) what is the npv (at t 0) of the waiting one year Initial investment Price of automobile Cost per vehicle Production Discount rate 1 R100,000,000 rises by 20 each year Po P, R18,000 per vehicle C either R12,000 or R18,000 with equal probability 10,000 vehicles per year forever i 20

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A proposed automative plant in South America will produce automobiles in Brazil. Brazilian currency is the real. The following facts apply. a)What is the NPV

A proposed automative plant in South America will produce automobiles in Brazil. Brazilian currency is the real. The following facts apply.

a)What is the NPV of investing today?

b) what is the npv (at t=0) of the waiting one year?

image text in transcribed

Initial investment Price of automobile Cost per vehicle Production Discount rate 1. = R100,000,000; rises by 20% each year Po = P, = R18,000 per vehicle C = either R12,000 or R18,000 with equal probability 10,000 vehicles per year forever i= 20%

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