Etemadi Amalgamated, a Canadian manufacturing firm, is considering a new project in Portugal. You are in Etemadi's corporate finance department and are responsible for deciding whether to undertake the project. The expected free cash flows, in EUR, are shown here: 4 Year Free Cash Flow (million EUR) 0 - 14.7 1 9.1 2 10.2 3 10.6 11.7 You know that the spot exchange rate is 0.95 CAD/EUR. In addition, the risk-free interest rate on CAD is 4.1% and the risk-free interest rate on EUR is 5.6%. Assume that these markets are internationally integrated and the uncertainty in the free cash flows is not correlated with uncertainty in the exchange rate. You determine that the CAD WACC for these cash flows is 8.4%. What is the CAD present value of the project? Should Etemadi Amalgamated undertake the project? (Enter all outflows of cash as negative numbers.) The forward rate for period 1 is CAD/EUR. (Round to five decimal places.) The forward rate for period 2 is CAD/EUR. (Round to five decimal places.) The forward rate for period 3 is CAD/EUR. (Round to five decimal places.) The forward rate for period 4 is CAD/EUR. (Round to five decimal places.) The cash flow in CAD for period O is million CAD. (Round to three decimal places.) The cash flow in CAD for period 1 is million CAD. (Round to three decimal places.) The cash flow in CAD for period 2 is The cash flow in CAD for period 3 is million CAD. (Round to three decimal places.) million CAD. (Round to three decimal places.) The cash flow in CAD for period 4 is million CAD. (Round to three decimal places.) The net present value is million CAD. (Round to three decimal places.) Based on the NPV, Etemadi Amalgamated undertake the project. (Pick the correct answer.) Etemadi Amalgamated, a Canadian manufacturing firm, is considering a new project in Portugal. You are in Etemadi's corporate finance department and are responsible for deciding whether to undertake the project. The expected free cash flows, in EUR, are shown here: 4 Year Free Cash Flow (million EUR) 0 - 14.7 1 9.1 2 10.2 3 10.6 11.7 You know that the spot exchange rate is 0.95 CAD/EUR. In addition, the risk-free interest rate on CAD is 4.1% and the risk-free interest rate on EUR is 5.6%. Assume that these markets are internationally integrated and the uncertainty in the free cash flows is not correlated with uncertainty in the exchange rate. You determine that the CAD WACC for these cash flows is 8.4%. What is the CAD present value of the project? Should Etemadi Amalgamated undertake the project? (Enter all outflows of cash as negative numbers.) The forward rate for period 1 is CAD/EUR. (Round to five decimal places.) The forward rate for period 2 is CAD/EUR. (Round to five decimal places.) The forward rate for period 3 is CAD/EUR. (Round to five decimal places.) The forward rate for period 4 is CAD/EUR. (Round to five decimal places.) The cash flow in CAD for period O is million CAD. (Round to three decimal places.) The cash flow in CAD for period 1 is million CAD. (Round to three decimal places.) The cash flow in CAD for period 2 is The cash flow in CAD for period 3 is million CAD. (Round to three decimal places.) million CAD. (Round to three decimal places.) The cash flow in CAD for period 4 is million CAD. (Round to three decimal places.) The net present value is million CAD. (Round to three decimal places.) Based on the NPV, Etemadi Amalgamated undertake the project. (Pick the correct answer.)
