Based on the five-year life of the project, does this project look attractive? Should the company invest at that time? Support your answer financially, and strategically.

6.0% 2.0% Cost of equipment (Euro) Cost of equipment (R$) Spot Exchange Rate (R$/Euro) Value of Loan (90% of Cost) 25,000 100,000 4.00 22,500 German Bank Interest Cost Vendor Subsidized Interest Cost Swap Exchange Rate (R$/Euro) Tax rate 4.20 34% 0 1 2 3 4 5 Now 2001 2002 2003 2004 2005 5,341.42 587.58 Loan Payments in Euro (6%) Interest Payment (Before tax) Principal Repayment Interest Payment (After tax) Net payment in Euro (6% Loan) 5,341.42 1,350.00 3,991.42 891.00 4,882.42 5,341.42 1,110.51 4,230.90 732.94 4,963.84 5,341.42 856.66 4,484.76 565.40 5,050.15 4,753.84 387.80 5,141.64 5,341.42 302.34 5,039.07 199.55 5,238.62 4,773.56 4,773.56 275.33 Loan Payments in Euro (2%) Interest Payment (Before tax) Principal Repayment Interest Payment (After tax) Net payment in Euro (2% Loan) 4,773.56 363.53 4,410.04 93.60 4,773.56 450.00 4,323.56 297.00 4,620.56 4,773.56 185.36 4,588.20 122.34 4,710.54 4,498.24 181.72 4,679.95 239.93 4,649.96 4,679.96 61.78 4,741.74 Financing Savings (in Euro) 261.86 313.88 370.20 431.10 496.88 Financing Savings (in R$) 1,099.79 1,318.30 1,554.85 1,810.63 2,086.90 Present Value of Savings in R$ (@6%) 6,509.95