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Americo Corp is considering construction of a manufacturing plant in Brazil. The initial investment will cost 14 million Brazilian reals (R). The company plans to
- Americo Corp is considering construction of a manufacturing plant in Brazil. The initial investment will cost 14 million Brazilian reals (R). The company plans to keep the plant open for 3 years during which cash flows from operations will be 5million, 5million and 4 million reals respectively at end each of the three years. At end of the third year Americo plans to sell the plant for 10 million reals. Americos required rate of return is 15% and the current exchange rate R/$ is 3.87. If the real is expected to depreciate by 5% per year determine the NPV for this project. Should Americo build this plant? Can you please show me step by step how to do this? Thank you!
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