A US "meat-free turkey" producer is considering investing in a two-year project in Australia. The project is expected to generate 1 million AUD in the first year after initial investment and 2 million AUD in the second year.

The turkey producer would have to invest 1.5 million USD in the project now at the start of the first year.

The cost of capital for similar projects is expected to be 14% per year.

What is the NPV of this project if the spot rate for the Australian dollar is forecasted to be USD 0.55 at the end of the first year and USD 0.65 at the end of the second year?

Select the closest answer.

Select one:

a. USD -17,692

b. USD -94,183

c. USD 350,000

d. USD 908,935

e. None of the above. We need more information.

The French government offers you a 3-year, EUR 50,000 loan to incentivize you to invest in a French business opportunity. The French government also offers you an interest rate of i_EUR = 10% p.a., with loans of similar risk typically yielding a return of i_EUR = 15% p.a. Assume the loan is paid off in equal annual installments over a three-year period, and you pay interest on the remaining principal amount.

If the French tax rate is 50%, what is the before-tax present value of the interest subsidy on this loan?

Select one:

a. EUR 3979

b. EUR 5000

c. EUR 3250

d. EUR 5246

e. EUR 2500

f. None of these.