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International Investment Decisions. Carpet Baggers Inc. is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany
International Investment Decisions. Carpet Baggers Inc. is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The forecast cash flows from the proposed plants are as follows: The spot exchange rate for euros is EUR/USD =1.3, while the rate for Swiss francs is USD/CHF =1.5. The interest rate is 5% in the United States, 4% in Switzerland, and 6% in the euro countries. The financial manager has suggested that if the cash flows were stated in dollars, a return in excess of 10% would be acceptable. (O224) a. What is the dollar NPV of the German project? b. What is the dollar NPV of the Swiss project? c. Should the company go ahead with the German project, the Swiss project, or neither
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