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Ostrom, Inc. is considering a project in Turkey. The project requires an initial investment of 1 0 0 0 Turkish lira and is expected to
Ostrom, Inc. is considering a project in Turkey. The project requires an initial investment of Turkish lira and is expected to generate annual cash flows of Turkish lira per year for each of the next two years. The projects expected salvage value is zero. Ostroms required rate of return is The current spot rate for the pound is $ and Ostrom uses the current spot rate to forecast the expected spot rate.
a Find the projects expected net present value in US dollars.
b At the end of year one, Ostrom receives an offer of $ for the project. The spot rate at the end of year one is $ Find the present value of divestiture present value of accepting the offer. Should Ostrom accept the offer? Explain your response with the necessary calculations.
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