Petrus Company has a unique opportunity to invest in a two-year project in Australia. The project is expected to generate one million Australian dollars (A$) in the first year and A$ 2 million in the second year. Petrus would have to invest $1,.5 million in the project. Petrus has determined that the cost of capital for similar projects is 14%. What is the break even salvage value in USD at the end of this project life (2nd year), if the future spot rates of the Australian dollar for the two years are expected to be $.55 and $.60, respectively?

		$2.04 million
		$1.22 million
		$0.122 million
		none of the above

Petrus Company has a unique opportunity to invest in a two-year project in Australia. The project is expected to generate one million Australian dollars (A$) in the first year and A$ 2 million in the second year. Petrus would have to invest $1.5 milliion in the project. Petrus has determined that the cost of capital for similar projects is 14%. What is the net present value of this project, if the future spot rates of the Australian dollar for the two years are forecasted to be $.55 and $.60, respectively?

		$2.905 million
		- $0.094 million
		$0.094 million
		none of the above