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please sir i have 1.5 hour only to answer Kindly thanks for your swift response. Thanks A U.S MNC plans to invest in land for

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please sir i have 1.5 hour only to answer

Kindly thanks for your swift response.

Thanks

A U.S MNC plans to invest in land for plantation purposes in Canada. The project requires initial outlays of Canadian dollars CAD10,300. The company expects the investment would return CAD3500, CAD4500, CAD5500, and CAD6500 in the next four years. Given that the cost of capital of the MNC's parent firm in U.S. dollars (USD) is 9.0 percent. The inflation rate in the USD is 3.2 percent per annum and 4 percent in Canada. The current spot exchange rate of CAD per USD is 1.37. a) Calculating the net present value (NPV) in CAD using the CAD equivalent cost of capital according to the Fisher Effect. Then, convert the NPV to USD at the current spot rate. (8 marks) b) Convert all cash flows from CAD to USD at Purchasing Power Parity forecasted exchange rates and then calculate the NPV at the dollar (USD) cost of capital. (8 marks) c) Are the two NPVs in (a) and (b) different or the same? Explain. (6 marks) d) What is the NPV in USD if the actual CAD/USD exchange rates is: S(0)=CAD1.37/$,S(1)=CAD1.45/$,S(2)=CAD1.51/$,S(3)=CAD1.54/$S(4)=CAD1.58/$

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