Question
An investment in China yields these expected after-tax renminbi cash flows (in billions). year CF 0 -500 1 150 2 300 3 250 You know
An investment in China yields these expected after-tax renminbi cash flows (in billions).
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| year | CF |
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| 0 | -500 |
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| 1 | 150 |
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| 2 | 300 |
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| 3 | 250 |
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| You know the following financial variables |
| Required Return US | 15.00% |
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| Required Return China | 11.745% |
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| Expected Inflation US | 6.0% |
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| Expected Inflation China | 3.0% |
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| Spot Rate | $ 0.1400 |
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Assume the international parity conditions hold. Calculate NPV by converting renminbi to dollars at expected future spot rates and discounting in dollars.
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Global Finance And Development
Authors: David Hudson
1st Edition
0415436354, 978-0415436359
