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One of the important components of multinational capital budgeting is to analyze the cash flows generated from subsidiary companies. Consider this case: LeBron Development Inc.
One of the important components of multinational capital budgeting is to analyze the cash flows generated from subsidiary companies.
Consider this case:
LeBron Development Inc. is a U.S.-based firm evaluating a project in Mexico.
You have the following information about the project:
The project requires a 130,000 peso investment today and is expected to generate cash flows of 62,250 pesos at the end of the next three years. | |
The current U.S. exchange rate with the Mexican peso is 12.012 pesos per U.S. dollar, and the exchange rate is expected to remain constant. | |
The firms WACC is 9%, and the project is of average risk. |
What is the dollar-denominated net present value (NPV) of this project?
$2,065.92
$2,295.47
$2,180.70
$1,951.15
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