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Suppose a proposed foreign investment involves a plant whose entire output is to be exported. The plant's capacity is rated at one million units per

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Suppose a proposed foreign investment involves a plant whose entire output is to be exported. The plant's capacity is rated at one million units per annum. With a selling price of $10 per unit, the yearly revenue from this investment equals $10 million. Since all sales are overseas, this revenue is not expected to vary with the LC exchange rate. the present rate of e devaluation of 10% is expected to lower unit costs by $0.30, while a 15% devaluation will reduce these costs by an additional $0.15. Suppose a devaluation of either 10% or 15% is likely with respective probabilities of .4 and .2 (the probability of no currency change is .4). Depreciation at the current exchange rate equals $1 million annually, while the loca tax rate is 40% a. What is the expected value of annual after-tax dollar cash flows, given the currency scenario described above, assuming no repatriation of profits to the United States

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