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I have this answered, but my excel formulas are messed up somewhere. Can someone please help me with the formulas to solve euro WACC and
I have this answered, but my excel formulas are messed up somewhere. Can someone please help me with the formulas to solve euro WACC and present value?
Problem 31-8 Manzetti Foods, a U.S. food processing and distribution company, is considering an inve in the euro area. You are in Manzetti's corporate finance department and are responsible deciding whether to undertake the project. The expected free cash flows, in euros, are uncorrelated to the spot exchange rate and are shown here: Year 0 1 2 3 4 Free Cash Flow (EUR million) -25 12 14 15 15 The new project has similar dollar risk to Manzetti's other projects. The company knows overall dollar WACC is 9.5%, so it feels comfortable using this WACC for the project. Th free interest rate on dollars is 4.5% and the risk-free interest rate on euros is 7%. a. Manzetti is willing to assume that capital markets in the United States and the euro are internationally integrated. What is the company's euro WACC? b. What is the present value of the project in euros? Risk-free rate on USD Risk-free rate on EUR Year 0 1 2 3 4 US WACC 4.50% 7.00% Free Cash Flow (EUR million) (25.00) 12.00 14.00 15.00 15.00 9.50% a. Manzetti is willing to assume that capital markets in the United States and the euro are internationally integrated. What is the company's euro WACC? Euro WACC 12.12% b. What is the present value of the project in euros? Project value (million EUR) Undertake project? 16.97 Yes Requirements 1. In cell E33, calculate the euro WACC. To calculate the euro WACC use the following fo WACC_EUR = (1 + WACC_USD) * (1 + r_EUR)/(1 + r_USD) - 1. (1 point.) 2. To calculate the project value, you will use the function NPV. In cell E37, input the func 3. To decide on the attractiveness of the project, you need to assess the value of the project In cell E38, if the project value, cell E37, is larger than 0; show Yes; otherwise display N any, is considering an investment rtment and are responsible for cash flows, in euros, are jects. The company knows that its s WACC for the project. The riskate on euros is 7%. e United States and the euro area uro WACC? e United States and the euro area uro WACC? WACC use the following formula: SD) - 1. (1 point.) In cell E37, input the function NPV. (1 point.) ess the value of the project by using the function IF. w Yes; otherwise display No. (1 point.)Step by Step Solution
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