Scot plc is planning to invest in Ghana and because it is risky to invest there the company will require an after-tax return of at least 20 per cent on the project.

Market research suggests that cash flows from the project in the local currency (the Ghana cedi) will be as follows:

Year 1 2 3 4 5

GHS000 250 450 550 650 800

The current exchange rate is GHS6.7.00/1; in subsequent years it is expected to be:

Year 1 2 3 4 5

GHS/ 7.00 6.9 7.1 7.3 8.00

The project will cost GHS600,000 to set up, but the Ghanaian government will pay GHS600,000 to Scot plc for the business at the end of the five-year period. It will also lend Scot plc the GHS250,000 required for initial working capital at the advantageous rate of 6 per cent per year, to be repaid at the end of the five-year period.

Scot plc will pay Ghanaian tax on the after-interest profits at the rate of 20 per cent, while UK tax is payable at the rate of 30 per cent per year. All profits are remitted at the end of each year. There is a double taxation treaty between the two countries. Tax in both countries is paid in the year in which profits arise.

(a) Calculate the net present value of the project and advise on its acceptability. (10 marks)

(b) Discuss the possible problems that might confront a company making the type of decision facing Scot plc. (5 marks)

(b)

i. Discuss the various methods governments use to impose exchange controls on multinational companies (5 marks)

ii. Discuss four ways multinational companies can overcome these exchange controls. (5 marks)

please try to complete my question because my question was not complete ..you didnt answer all