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A year ago, the spot exchange rate of the euro was $ 1 . 2 0 . At that time, XT Co . ( a
A year ago, the spot exchange rate of the euro was $ At that time, XT Coa US firm invested $ million to establish a project in the Jordan. It expected that this project would generate cash flows of million euros at the end of the first and second years XT Co always uses the spot rate as its forecast of future exchange rates uses a required rate of return of percent on international projects Because conditions in the Jordan are weaker than expected the cash flows in the first year of the project were million euros and XT now believes the expected cash flows for next year will be million euros A company offers to buy the project from XT today for $ million Assume no tax effects Today the spot rate of the euro is $ Should XT accept the offer?
A year ago, the spot exchange rate of the euro was $ At that time, XT Coa US firm invested $ million to establish a project in the Jordan. It expected that this project would generate cash flows of million euros at the end of the first and second years XT Co always uses the spot rate as its forecast of future exchange rates uses a required rate of return of percent on international projects Because conditions in the Jordan are weaker than expected the cash flows in the first year of the project were million euros and XT now believes the expected cash flows for next year will be million euros A company offers to buy the project from XT today for $ million Assume no tax effects Today the spot rate of the euro is $ Should XT accept the offer?
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