SHOW ALL WORK

1. NPV and Financing. Louisville Co. is a U.S. firm considering a project in Austria which it has an initial cash outlay of $7 million (YEAR 0). Louisville will accept the project only if it can satisfy its required rate of return of 18 percent. The project would generate 2 million euros one year from now due to sales to a large corporate customer in Austria. In addition, it also expects to receive 4 million euros per year for years 2 and 3. It expects 1 Euro to cost $1.40 for year 1, $1.45 for year 2 and $1.50 for year 3.

1. Estimate the net present value (NPV) of the project. Will they accept this project??