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Barline, Inc. just constructed a manufacturing plant in Turkey. The construction cost 9 billion Turkish lira. Barline intends to leave the plant open for three
Barline, Inc. just constructed a manufacturing plant in Turkey. The construction cost 9 billion Turkish lira. Barline intends to leave the plant open for three years. During the three years of operation, Lira cash flows are expected to be 3 billion Lira, 3 billion Lira, and 2 billion Lira, respectively. Operating cash flows will begin one year from today and are remitted back to the parent at the end of each year. At the end of the third year, Barline expects to sell the plant for 5 billion Lira. Barline has a required rate of return of 17 percent. It currently takes 15 Lira to buy one U.S. dollar, and the Lira is expected to depreciate by 5 percent per year. Determine the NPV for this project. Should Barline build the plant and why?
(please provide the answer with the normal working, without using tables)
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