Arman Corp, a U.S. company is considering a project in Italy. The company expects the project to generate 5 million euro in a year. It decides to hedge the receivables with a forward contract today. Currently, the spot rate of the euro is $1.08, the 1-year forward rate of the euro is $1.10 and the expected spot rate of the euro in a year is $1.12. The initial out lay of this project is $3 million. Arman has a required return of 16%

Calculate the NPV of this projected based on expectation of 5 million euros in receivables?

Identify 2 factors that could cause NPV to change

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