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A US firm is considering a 1 million investment project in the UK, expecting to receive 0.5 million in year 1, and 0.8 million in
A US firm is considering a 1 million investment project in the UK, expecting to receive 0.5 million in year 1, and 0.8 million in year 2.
The risk adjusted cost of capital for a similar US project is 10%.
The current spot exchange rate is 1.5/$.
A one-year government bond rate is 2.5% in the US and 1.75% in the UK.
A two-year government bond rate is 3.0% in the US and 2.0% in the UK.
What is the NPV of the project based on the home currency approach?
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