Consider the following international investment opportunity. It involves a gold mine that can be opened at a cost, then produces positive cash flows, but then requires environmental clean-up.

The current exchange rate is $1.60 = 1.00. The inflation rate in the U.S. is 6 percent and in the euro-zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent.

Find the euro-zone cost of capital to compute the dollar-denominated NPV of this project.