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PART B (15PTS) Suppose the consulting company that you hired provided the following exchange rate forecast for the next five years. Year 1 2 3
PART B (15PTS) Suppose the consulting company that you hired provided the following exchange rate forecast for the next five years. Year 1 2 3 4 5 Exchange Rate Forecast 1.2686 1.238 1.2081 1.1789 1.1504 Your consultants pointed to the disarray in British politics and suggested using a bond-based country risk premium of 130BP or 1.3%. Further research suggested that UK equity market volatility is roughly 1.2 times the bond market volatility, and Portal's exposure to UK country risk is the same as the average UK company. Based on your consultations with the consultants and your in-house research, you expect the British Pound to depreciate by 1.5% per year against USD in the foreseeable future. Using the information provided above, calculate the Portal's Enterprise Value in USD terms by converting the pound cash flows into USD at the forecasted exchange rates and discounting them at the USD cost of capital
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