Farbucks is thinking of expanding to South Korea. The current indirect rate for dollars and South Korean won is $1,002$ won per dollar. The expected inflation rate in South Korea should hover near $0\mathrm{.}8\%$ for the next five years. The expected U$.$S$.$ inflation rate should stay around $3\mathrm{.}4\%.$ The discount rate for expanding is $14\%$ for Farbucks. Given the following projected cash flows for the expansion$$ project, use the domestic NPV approach to determine whether Farbucks should expand to South Korea.

Year$0$: initial investment costs of $90,000,000$ won per coffee shop

Year $1$ cash$$ flow:$20,000,000$ won

Year $2$ cash$$ flow:$35,000,000$ won

Year $3$ cash$$ flow:$60,000,000$ won

Year $4$ cash$$ flow:$85,000,000$ won

Year $5$ cash$$ flow:$35,000,000$ won

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Part $1$

Domestic currency approach in multinational capital budgeting consists of the following$$ steps:

Step$1$: Calculate the forward exchange rates.

Step$2$: Convert all cash flows in foreign currency into dollars using current and forward exchange rates.

Step$3$: Convert all future dollars into present value with the domestic discount rate.

Step$4$: Add the net present value of the outflow and inflow.

Step$5$: Accept the project if its net present value$($NPV$)$ is positive and reject if negative.

Part $2$

$$First$,$ complete step $1$ by calculating the forward rates.$$

The current indirect exchange rate is $1,002$ for dollars and South Korean won. The inflation rate in South Korea is expected to hover near $0\mathrm{.}8\%$ for the next five years and the U$.$S$.$ inflation rate is expected to stay around $3\mathrm{.}4\%.$ What is the$1-$year forward indirect rate for dollars and South Korean$$ won? won per$$ $