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Please help 11. A U.S. multinational corporation is considering a new project in the UK. The project requires an initial investment or outlay of 705
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11. A U.S. multinational corporation is considering a new project in the UK. The project requires an initial investment or outlay of 705 million. The project is expected to have cash inflow of 505 million in the first year of operation and 416 million in the second year of operation. The current exchange rate is $1.2832/. The risk-free interest rate in the United States is 3 percent and the risk-free interest rate in the UK is 5 percent. The president of the firm estimates that the required rate of return on the market portfolio in the United States is 12.36 percent, and that the required rate of return on the market portfolio in the UK is 14.18 percent. The president also estimates that the project beta is about 0.80, valued against either the U.S. or the UK market. What is the present value of the project if evaluated using the decentralized method of international capital budgeting? 6 12. Consider the information provided in #11 above. What is the present value of the project if evaluated using the centralized method of international capital budgetingStep by Step Solution
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