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

Yr 0 = - 64,000 Yr 1 = 160,000 Yr 2 = - 100,000

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.

a.What is the dollar-denominated IRR of this project?

b. What is the euro-denominated IRR of this project?

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

d.Find the dollar cash flows to compute the dollar-denominated NPV of this project. Please note that your answer MUST contain currency symbols.