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Help! Foreign capital budgeting Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrine's financial planners are considering undertaking a 1 -year project in the

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Foreign capital budgeting Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrine's financial planners are considering undertaking a 1 -year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2000 and a cash inflow the following year of $2400. Sandrine estimates that its risk-adjusted cost of capital is 12%. Currently, 1 U.S. dollar will buy 0.7 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 6.5%, while similar securities in Switzerland are yielding 4.5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. a. If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? Round your answers to two decimal places. NPV=$ Rate of return =% b. What is the expected forward exchange rate 1 year from now? Round your answer to two decimal places. SF per U.S. \$ c. If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine? Do not round intermediate calculations. Round your answers to two decimal places. NPV= Swiss hancs Rate of return = % Foreign capital budgeting Initial investment (U.S. Dollars) Year 1 Inflow (U.S. Dollars) Risk-adjusted cost of capital Spot rate, Number Swiss francs per U.S. Dollar Yield, 1-yr. U.S. securities Yield, 1-yr. Swiss securities $2,000 $2,400 12.00% 0.7 6.50% 4.50% U.S. NPV U.S. rate of return |1-yr. forward rate, Swiss francs per U.S. Dollar Formulas Initial investment (Swiss francs) Year 1 Inflow (Swiss francs) NPV (Swiss francs) Swiss rate of return \#N/A \#N/A

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