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An Australian company plans to initiate a project in France. The project will last 2 years and shut down afterwards. The initial investment for the
An Australian company plans to initiate a project in France. The project will last 2 years and shut down afterwards. The initial investment for the project is €3,750,000. Expected cash flows from the project over the next two years are €2,950,000 and €1,850,000 respectively.
The expected spot exchange rate at the time of initial investment is A$1.40/€, while that over the next two years are A$1.36/€ and A$1.37/€ respectively.
Required:1) If the company uses a discount rate of 10 percent, what is the NPV of this project expressed in A$ (rounded to nearest value)?
The expected spot exchange rate at the time of initial investment is A$1.40/€, while that over the next two years are A$1.36/€ and A$1.37/€ respectively.
Required:1) If the company uses a discount rate of 10 percent, what is the NPV of this project expressed in A$ (rounded to nearest value)?
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To calculate the NPV of the project in A we need to convert all cash flows from to A using ...
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Principles of managerial finance
Authors: Lawrence J Gitman, Chad J Zutter
12th edition
9780321524133, 132479540, 321524136, 978-0132479547
