Question
An investment in China yields these expected after-tax renminbi cash flows (in billions). year CF 0 -508 1 155 2 308 3 259 You know
An investment in China yields these expected after-tax renminbi cash flows (in billions).
| year | CF | ||||
| 0 | -508 | ||||
| 1 | 155 | ||||
| 2 | 308 | ||||
| 3 | 259 |
| You know the following financial variables |
| RequiredReturnUS | 15.00% | |||
| RequiredReturnChina | 11.745% | |||
| ExpectedInflationUS | 6.0% | |||
| ExpectedInflationChina | 3.0% | |||
| SpotRate | $0.17 |
Assume the international parity conditions hold. Calculate NPV by converting renminbi to dollars at expected future spot rates and discounting in dollars. (X.XXX)
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Analysis for Financial Management
Authors: Robert Higgins
11th edition
77861787, 978-0077861780
