Gorbochevsky Equipment has an investment opportunity in Europe. The project costs EUR 12 million and is expected to produce cash flows of EUR 1.8 million in year 1, EUR 2.6 million in year 2, and EUR 3.5 million in year 3. The current spot exchange rate is $1.36/EUR; the current riskfree rate in Canada is 2.3%, compared to that in Europe of 1.8%. The appropriate discount rate for the project is estimated to be 13%, the Canadian cost of capital